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Collection letter, liens and collections
August 17 2023
Collection letter, liens and collections
          In regards to customers who are past due and will not respond to us. Are we able to have a lawyer draft up a general letter we can send to businesses threatening a lien? I am not sure what process a lien requires, but might be effective in getting us paid from some of these businesses or companies giving us the run around.
          A guy with a baseball bat might be effective too, but, alas, you can’t do it.  Threatening a lien is also not going to work and likely violates consumer laws too.
          Forget a Mechanic Lien, it’s not practical except in the most unusual circumstances.  I’ll explain. 
          Mechanic liens are filed to create a security interest in real property when the laborer or materialman has “improved the real property”.  Also the Mechanic Lien has to be filed with a relatively short period of time from the last date that material was installed or labor performed, usually four month for residential and eight month for commercial properties. 
          So the first problem is that the Standard Forms Agreements provide that the alarm or other equipment is “personal property’, not “real property”, which in a nutshell means it’s removable.  We do this for other reasons I won’t get into in this article.  Threatened to file a Mechanic Lien when you don’t have the right to not permitted, and worse, if you do file a Mechanic Lien when you know it’s wrong you could end up being used for “Slander of Title”.
          If a Mechanic Lien is appropriate you still have the headache of what to do with your lien once filed.  A property owner would not be able to transfer title [sell] or mortgage the property without bonding the lien, and may violate the terms of existing mortgages.  A tenant may violate a lease by suffering a lien.  But short of that nothing is going to happen with your lien except it’s going to expire a year after filing [unless renewed] unless you foreclose your lien.  That is another mess.  You will have to start a lawsuit naming everyone ahead of you in title in order to sell the property free of liens and encumbrances.  If there isn’t any equity in the property you won’t see a dime for your efforts because everyone ahead of you will be paid first. 
           I should note that you may in fact do "lienable" work and a Mechanic Lien may be appropriate.  An attorney will be necessary; a good one.
          The Standard Form Agreements do permit the filing of what’s commonly known as a UCC lien, which will give you a lien on the equipment and sometimes other personal property of the customer, but not real property.  Foreclosing a UCC lien is easier but also not really a run of the mill lawsuit. 
          What should you be doing when it comes to customers delinquent in payment?  You should be a member of the K&K Concierge Program.  One benefit is a free collection letter each month, a $150 value.  When you use a K&K Standard Form Agreement you will also have the support of the K&K Collection Department through the arbitration process where most cases are resolved favorably.  Best of all the collection cases are taken on a contingency basis, not “on the clock” which would be the case for a Mechanic Lien or UCC foreclosure. 
          The arbitration process is the fastest and most economical to pursue and it’s readily available to all K&K clients using the K&K Agreements.  That’s your best option.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301