When a debtor fails to meet their obligations under a security agreement, the secured creditor enters a new phase of the relationship, one defined not by cooperation but by enforcement. The Personal Property Security Act, known across common law provinces as the PPSA, provides secured creditors with a structured framework for realizing on their security interest when default occurs. Understanding what a secured creditor can do upon default is essential knowledge for any business owner, whether you are the debtor facing enforcement or a creditor contemplating your options. This lesson examines the enforcement mechanisms available under Canadian secured transactions law, the procedural safeguards that protect debtors, and the practical realities of how these rules play out in commercial settings from Halifax to Vancouver.
Default itself is not defined uniformly by statute. Instead, security agreements typically specify what constitutes a default, which may include failure to make scheduled payments, breach of representations or warranties, failure to maintain insurance on collateral, unauthorized disposition of collateral, or the debtor's insolvency or bankruptcy. The parties themselves determine through their contract what events will trigger enforcement rights, though the most common default is simply the failure to pay amounts owing when due. Once default occurs, the secured creditor's rights transform from a conditional interest in collateral to an enforceable claim that can be exercised through seizure, sale, or retention of the secured property. The PPSA in British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario, as well as equivalent legislation in other common law provinces, establishes the procedures that govern this enforcement process. Quebec operates under an entirely different framework through the Civil Code of Quebec, which governs hypothecs and their realization through distinct mechanisms that we will address where the approaches diverge.