Definition
The first-charge lien (or priority mortgage) is a conventional mortgage registered in first position at the Quebec Land Registry, giving it priority over all subsequent hypothecary claims.
**Rank principle**: - General rule: whoever is registered first has priority in law (prior tempore, potior jure) - In case of seizure or forced sale, creditors are repaid in order of their rank - A first-rank lender takes much less risk than a second-rank lender
**Impact on rate**: - 1st rank: lowest rate (minimal risk for lender) - 2nd rank: higher rate (risk that sale proceeds may not cover the claim) - 3rd rank and beyond: generally private loans at very high rates (12-18%)
**Exceptions (legal mortgages of higher rank)**: Certain legal mortgages take priority over conventional ones even if registered later: - Construction legal hypothec (workers, materials) — Notice within 30 days of end of work - Condominium syndicate legal hypothec (unpaid contributions of 3+ months)
**HELOC (Home Equity Line of Credit)**: A first-rank HELOC can coexist with a standard mortgage. Lenders often use a mortgage 'registered' at 125% of value to simultaneously cover the loan and the line of credit.