You've secured financing outside of the traditional banking system — from a friend, an investor, or a private lending company — and you're ready to move forward. Or perhaps you're the lender, looking to secure your money against a property in Laval or the greater Montreal area. Private real estate lending can be a legitimate and practical solution. But without the right protections in place, this kind of transaction can quickly become a source of serious disputes — for both parties.
Private Real Estate Loans: What Are We Actually Talking About?
A private real estate loan is financing provided by an individual or non-institutional lender, secured against a property. In Laval and the greater Montreal area, this type of arrangement is used in specific circumstances: a damaged credit history, a construction or renovation project that doesn't meet standard bank criteria, a need for quick liquidity, or a time-sensitive purchase where traditional bank timelines simply won't work.
This type of loan is entirely legal in Quebec. What separates a well-structured transaction from a problematic one is how it's put together — and how it's documented.
The Real Risks for the Borrower
High Rates and Clauses Worth Watching Closely
Private loans typically carry interest rates significantly higher than those offered by financial institutions. That's not illegal in itself — but certain clauses can substantially increase the true cost of the loan or limit your repayment options.
A poorly drafted contract may also include steep penalties, unfavourable renewal terms, or conditions that make refinancing difficult down the road. In more serious cases, a borrower can find themselves at risk of losing their property if the contract terms are unclear or were misunderstood at the time of signing.
That's why it's essential to have any document read and explained before signing — by a professional who has no interest in the transaction.
The Real Risks for the Private Lender
Lending Without Solid Security Is Risky
The risks on the lender's side are just as real. Advancing funds without a notarized hypothec deed and without registration at the Quebec Land Registry is lending without a safety net. Without a legally constituted and registered hypothec, the lender may have no priority claim against the property in the event of default — particularly if other creditors are already registered against it.
A private real estate loan in Laval or elsewhere in the Montreal region, when not properly documented, can leave the lender facing lengthy and costly legal proceedings to recover their funds.
The Notary's Central Role in a Private Loan
A Notarial Act That Protects Both Parties
This is where the notary becomes an essential player. Under Quebec law, a hypothec deed on a property must be notarized to be valid and enforceable against third parties. The notary — whether acting as a private hypothec notary in Sainte-Dorothée or elsewhere — ensures that the deed is properly drafted, that each party's rights are clearly defined, and that the hypothec is duly registered at the Land Registry.
Before proceeding, the notary also conducts a title examination. This step identifies any existing issues: previously discharged hypothecs that remain on title, third-party rights, or irregularities in the chain of title. It's an indispensable safeguard for both the borrower and the lender.
Questions to Ask Before You Commit
Before entering into a private real estate loan, it's worth asking:
- Are the interest rate and all conditions clearly documented?
- Is there a prepayment clause — and what does it cost to exercise it?
- Will the hypothec be registered at the Land Registry?
- Has the title been verified and confirmed free of issues?
- Do both parties genuinely understand their respective obligations?
Me Petrulian will walk you through the details during your consultation, based on your specific situation.
Consult Groupe Synergie Notaires
Considering a private real estate loan in Laval or the Montreal area? Before you sign anything, consult Me Mirabela Petrulian at Groupe Synergie Notaires. Whether you're the borrower or the lender, a notarial consultation from the outset can spare you years of complications — and give you the peace of mind you deserve.
📍 67 Boulevard Samson, Laval (Sainte-Dorothée), QC H7X 3E6 📞 (514) 399-1009 ✉️ info@gsnotaires.com
This text is provided for informational purposes only and does not constitute legal advice. As each situation is unique, it is recommended that you consult a professional to obtain advice tailored to your particular situation.