Hypothecation

Hypothecation means pledging property as security for a debt while the borrower keeps possession. "Hypothec" is a Quebec civil law term; it is not used in BC law. In BC, the equivalent concepts are a security interest in personal property and a mortgage over land.

How BC law treats it

Security over personal property in BC is governed by the Personal Property Security Act, RSBC 1996 c 359, and mortgages of land are registered under the Land Title Act, RSBC 1996 c 250. A mortgagee must bring foreclosure proceedings in the BC Supreme Court to sell land, and a secured creditor enforcing against substantially all of an insolvent debtor's inventory, receivables or other business property must give 10 days' notice under s. 244 of the Bankruptcy and Insolvency Act.

What it means for your business

A BC business granting or taking security should use a properly drafted security agreement and register it in the right registry.

Risks and common mistakes

A lender that fails to register its security interest can lose priority to other creditors or a trustee in bankruptcy.

For the full explanation, see our entry on Security interest.

General information about British Columbia and Canadian law, current to October 2026. It is not legal advice.