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A legal mortgage is an inscription on the Quebec land register that takes a real estate property (house, building, land) as security for a debt.There are 4 types of legal mortgages:
If you owe federal or state taxes and you own your home, you run the risk of receiving a legal mortgage for the amounts owed registered against your home. You won't lose your property if they put a legal mortgage on the house, but your mortgagee may deny you refinancing in the future or even decide not to renew your loan at the end of the term.
How will your creditor know about the legal mortgage on your home? Through an address notice that is placed on all homes with a mortgage. The address notice informs mortgagees of any subsequent registration on their collateral (the house). When they receive the address notice, they will review your file and make a decision to either put you in default on your mortgage right away or review your file at the end of the term.
If the federal or provincial government exhausts all their options to collect, they will be able to obtain a federal or provincial court judgment which will then be recorded on your credit score. This is the “Public Records” section of your credit score. Once entered, the judgment can take 6 to 7 years to disappear and will certainly affect your ability to borrow. Even if you are not a homeowner, having a tax judgment may prevent you from purchasing a property.
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