commercial contract used for residential subscriber and now there's problem July 21, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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commercial contract used for residential subscriber and now there's problem
July 21, 2018
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commercial contract used for residential subscriber and now there's problem
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Ken
    We completed a job. We had the customer sign one of your contracts. I believe a mistake was made that the commercial one was used instead of the residential one but hopefully it does not change things that much.
    Over the course of the project, the customer made changes, added additional work, etc... we have emails for all of the work. This caused the final bill to go up a few thousand dollars to $14,965.
    Customer at this time is unhappy with some of work (most of it was due to changes he made at the last minute). And while his total balance still is $9,109.75. He only wants to pay another $5k. When asked what the issues are and if we can fix them he said he does not want us to come back.
    Based on the contract, what options do we have available?      Are we able to put a contractors lien? What else?
Thank you
DM
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Response
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    There is a very good reason we offer a Residential All in One and a Commercial All in One. They make look similar, but they are quite different. And, now you're about to find out why and also find out whether it "changes things that much". 
    I'll cut to the chase and explain after. You're lucky your customer wants to pay $5000, because what he could say is:     
         "you know what, I love your work, you did a great job, works perfectly. But here's the thing. You used a commercial contract instead of a residential contract, and you've been working in my house. Your commercial contract doesn't have a 3-day notice of cancellation right, and you never gave me a 3-day notice of cancellation. So, I am exercising my right of rescission. You can remove your equipment and restore my property as it was with no damage and give me all my money back that I paid you so far. Then you can now drag your dumb ass out of here and I'm not giving you another dime." 
    What? The failure to use a residential contract and give the 3-day notice of cancellation plays out differently depending on when it becomes an issue.
    If you haven't done any work yet, the customer can cancel and you have to give back any money advanced; all of it.
    If you've done any work, even completed the job, the customer can cancel and tell you to remove it and restore the premises. You will have to give all the money back.
    If you've done work or completed the job and the customer cancels but won't let you remove the system, here's what's going to happen if you sue the customer. You won't be able to get any more money from the customer, but, the good news is, you will probably be allowed to retain what's been paid as long as your work was worth at least what's been paid. 
You cannot use a commercial contract for a residential customer. You can use a residential contract with a commercial customer, but why would you? Your contracts are the most valuable asset your business has; why cause issues that you will regret when you are looking to value your company or sell the accounts. The Standard Form Agreements are designed for different applications and different customers.
    Getting back to the questions, you will not be able to file a Mechanic Lien [what you call a Contractor's lien]. Actually, you may be able to file the lien, but you won't be successful enforcing it and you will probably be liable for damages for filing it if you don't promptly remove it and maybe even if you do. Under most circumstances you cannot file a Mechanic Lien. The most compelling reason is that the contracts identify the equipment as personalty and also stipulate that you are not improving real property, which happens to be a criteria for filing a Mechanic Lien. You will also find that filing a Mechanic Lien is costly and even if you have the right to file it, too costly to foreclose. There are better options, usually, and that is for another day. 
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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
ken@kirschenbaumesq.com
516 747 6700
www.KirschenbaumEsq.com