What is taking in payment?

Taking in payment allows the creditor to take the hypothecated property (also known as mortgaged property) in full payment of the debt. The creditor thus takes the property free of hypothecs published after his one.

Taking in payment is exercised within a well defined legal framework. So, when half or more, of the obligation secured by the hypothec has been already repaid, the creditor must obtain the authorization of the court before exercising the taking in payment.

Let us note that the debtor in difficulty can always surrender voluntarily the property in favor of his creditor.

The hypothecary creditors (also known as mortgage creditors) whose hypothec was published after that of the one who exercises the taking in payment, as well as the debtor, can require that the creditor abandons the taking in payment and proceeds himself to the sale of the property or makes a sale by judicial authority (see below for the sale by the creditor and the sale by judicial authority). To exercise this option, they must, beforehand, have registered a notice to that effect, reimbursed the expenses incurred by the creditor and advanced the sums necessary for the sale of the property.

The creditor required to sell must proceed to the sale, unless he prefers to pay off the subsequent creditors who registered the notice or, if the notice was registered by the debtor, unless the court authorizes the creditor, on the conditions that it determines, to take in payment.

When the default was not remedied or when the payment was not made within the time limit allowed to surrender, the creditor takes the property in payment by the effect of the judgment ordering the surrender, or by a voluntary act of surrender consented by the person against whom the hypothecary right is exercised, and accepted by the creditor, if the subsequent creditors or the debtor did not require that he proceeds to the sale.

The judgment ordering the surrender or the voluntary act of surrender consented and accepted constitutes the title of ownership of the creditor.

This remedy can be interesting for a first rank creditor because he will take in payment the property free of hypothecs published after his one. A lower rank creditor will have to be careful because the creditors having registered their rights before his one could, in turn, want to take in payment the property.