Security interests in personal property

In Canada, the power over the creation, perfection and priority of security interests in personal property primarily rests with the individual provinces. This right arises from the provinces’ constitutional authority to legislate in respect of property and civil rights. There are two basic regimes in Canada under which the provinces maintain and regulate the protection of security interests in personal property:

  1. In the province of Québec, a civil law jurisdiction, a security interest may be taken over personal property under the Civil Code of Québec by way of a “hypothec”, which must be published or registered in order for the secured party’s interests to be effective as against third parties; and
  2. In all other provinces in Canada, each such province has enacted a Personal Property Security Act (each referred to as a PPSA). Each PPSA provides defined rules with respect to creating, perfecting, prioritizing and enforcing security interests granted by debtors in personal property to secured parties. Each province maintains a personal property registry, a computer-based registration database that records and maintains security interests of creditors in various collateral of debtors.

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