Understanding the 60-day notice (Part 1)

In the world of property ownership in Quebec, few things strike fear into the hearts of homeowners like the 60-day notice. But what exactly is this document, and why does it hold such power?  

A 60-day notice isn't just a piece of paper; it's a stark wake-up call, a signal that your property ownership is hanging by a thread. This notice is the final warning you receive when you're at risk of losing your property. It's what you get when things have gone south – maybe you've missed too many mortgage payments, or perhaps the government is knocking on your door for back taxes.

But here's what many don't realize: the 60-day notice isn't just a simple alert. It's a complex legal document, steeped in the nuances of Quebec's unique legal system. It's the culmination of a series of unfortunate events, a last-resort measure when all other avenues have been exhausted.  

So, why should you care? Because understanding the 60-day notice is the first step in preventing the worst-case scenario – the loss of your property. It's about knowing the enemy, and in this case, knowledge truly is power. In the following sections, we'll dissect how you end up with one of these notices, what it means, and most importantly, how you can navigate this treacherous terrain.

How does one end up with a 60-day notice?  

Let's get to the heart of the matter: how does a regular person, maybe someone like you, end up with a 60-day notice? This isn't a scare tactic; it's reality for many, and understanding it is the first step to steering clear of trouble.  

The most common route to this notice is, frankly, mortgage trouble. It's nothing to be ashamed of. Life has a knack for throwing us curveballs – unexpected expenses, job changes, health issues. These aren't just inconveniences; they can derail your financial plans, making it tough to keep up with mortgage payments. When these payments start slipping, your lender, who's been understanding up to a point, has to draw a line. That's where the 60-day notice comes in. It's a serious signal, a wake-up call that things need to change, and fast.  

But mortgages aren't the only pitfall. There's also the taxman to consider. Falling behind on property taxes can trigger a 60-day notice from the government. It's their way of reminding you that those taxes aren't just going to vanish into thin air – they need to be dealt with.  

And let's not forget about other debts tied to your property, like a home equity line of credit. These too can lead to the same situation if you're not keeping up with payments.

Now, why is this important? Because knowing these triggers helps you avoid them. And if you're already facing this challenge, it's not the end of the road. There are ways out, strategies to get back on track, which we'll dive into next. This isn't about fear; it's about facing reality head-on and finding a way forward.

The reasons behind the notice

In Quebec, a 60-day notice can be a consequence of various situations, each with its own backstory and legal context. Let's explore these scenarios to gain a fuller understanding.

Mortgage Defaults: The Common Culprit

The most familiar cause of a 60-day notice is defaulting on a mortgage. Before this notice is issued, the lender typically goes through a series of steps. These may include reminders, late payment fees, and possibly a legal mortgage (hypothèque légale) as a formal claim against the property. If these steps don't result in payment, the lender then escalates to issuing a 60-day notice.

Back Taxes: Government-Initiated Notices

Another scenario involves unpaid property taxes. Here, the government may place a legal mortgage on the property for unpaid taxes. If the debt remains unsettled, this can lead to a 60-day notice. This notice is the government's way of enforcing its claim, signaling serious legal and financial repercussions if the taxes aren't paid.

Other Secured Debts: A Broader Scope

Secured debts beyond mortgages can also lead to a 60-day notice. This includes debts like home equity lines of credit or other loans secured against the property. Before a 60-day notice is issued for these debts, similar steps to those in mortgage defaults are taken, including the placement of legal claims against the property.   

Legal Actions and Judgments

In some cases, a 60-day notice can result from legal actions or judgments against the property owner. If a creditor obtains a judgment for unpaid debts and secures it against the property, this can lead to a 60-day notice if the judgment is not satisfied.  

In each of these scenarios, the 60-day notice is a critical legal step, indicating that the situation has reached a point where immediate action is necessary. It's a call to address the underlying issue promptly to avoid further legal action, such as foreclosure or seizure of the property.  

Why traditional banks might hesitate

When facing a 60-day notice, many homeowners turn to traditional banks for help, only to find the doors closed. Understanding why banks are often reluctant to lend in these situations is crucial.

Risk Management: A Bank's Perspective

For banks, lending is all about assessing and managing risk. A 60-day notice is a significant red flag, indicating that the borrower is experiencing financial difficulties. Whether it's due to missed mortgage payments, unpaid taxes, or other debts, these issues signal a higher risk of default. Banks, with their stringent risk assessment protocols, are often hesitant to take on what they perceive as an increased risk.   

Collateral Stability Concerns

Banks lend money against collateral, typically the property itself. When a property is under a 60-day notice, its status as reliable collateral is compromised. The risk of foreclosure or legal complications surrounding the property makes it a less secure option for banks. They are concerned about the property's future value and the likelihood of recovering their funds in case of default.  

Impact on Creditworthiness

A 60-day notice usually affects the borrower's credit score negatively. Banks heavily weigh credit history in their lending decisions. A lowered credit score, as a result of financial struggles leading to the notice, can make banks skeptical about the borrower's ability to repay any new loans.

Portfolio and Reputation Considerations

Banks also have to consider their overall loan portfolio and reputation. Providing loans to clients with a history of financial instability can affect a bank's financial health and market reputation. They need to maintain a balance in their loan portfolio, often leading them to avoid high-risk lending scenarios.   

Given these factors, traditional banking routes might not be viable for those with a 60-day notice. However, alternative financing options do exist. In the following section, we'll explore how private home equity loans, such as those from PADS, can offer a solution for homeowners in this predicament.