Making sure you get paid

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No matter how passionate you are about your line of work, at the end of the day, you need to get paid if you are going to make a living doing it.
For many in business, collecting payment is often the most nerve-wracking and aggravating part of any transaction.  After putting in days or weeks of work to deliver an excellent product or service to your client, having to chase them down to collect your money can seem like a slap in the face. Fortunately, there are various mechanisms that help you ensure that you will be compensated.

Quebec law allows a creditor to obtain a hypothec against certain specific property belonging to his debtor in order to ensure that the debtor performs his or her obligations towards the creditor. In other words, if you are owed money, you can conclude an agreement with the debtor whereby a particular asset owned secures the payment of the debt by the debtor.
For example, if you loan someone money to buy a building, you can conclude an agreement stating that if the debtor fails to repay you according to the terms of your loan agreement, you can take possession of the building in order to pay off the loan.
There are numerous formalities that must be accomplished to create a valid hypothec. Furthermore, there are additional formalities that must be performed in order to exercise your hypothecary rights if the need arises.

Personal guarantee
When doing business with a new corporation or with a person who has not established a solid credit history, it is a common practice to request a personal guarantee from a third party that is credit-worthier. In Quebec, this is known as a suretyship (or “cautionnement” in French). In the event that the original debtor fails to make payment when due, the creditor can demand that the guarantor make payment in the place of the debtor.

Another common practice that ensures, at least, partial payment of sums due for goods provided or services rendered, is taking a deposit from the debtor. For example, a service provider may require that his or her client pay a deposit before the service provider commences the performance of the services. The balance will often be required once the work is completed.
Also, a commercial landlord may require the payment of several months’ rent as a deposit just in case the tenant damages the premises or fails to make payment. However, if you offer residential property for rent, it is important to know that there are certain prohibitions on requesting rent in advance and other forms of deposit.
For more information, you may contact Kelly Francis at (514) 802-7736 or at

Disclaimer: This article merely gives readers an overview of the issues discussed therein and is not legal advice. Please do not take action based on this article alone without first seeking the legal counsel appropriate for your specific situation!