Question:
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Ken,
I read your emails daily and appreciate your concern and the work that you do for our industry. I am sure this topic has come up before and I just missed your reply.
Do your contracts allow for a company to repossess equipment from homes and business that do fail to pay for installations or equipment fees?
Seven months ago our company installed a $5000 phone system in a business and have yet to be paid. The corporate headquarters located in another state claim that their office manager failed to comply with their proper procedures on purchasing equipment and refuse to pay for the phone system.
We have reached nothing but dead ends in our attempt to collect and unfortunately left with taking the loss or hiring an attorney for advice.
Thanks
Terry
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Answer:
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All the Standard Form Contracts have a paragraph that grants the alarm company a security interest in either the equipment installed [usually for residential jobs] or in all assets of the subscriber [for commercial subscribers]. The provision permits the filing of a UCC-1 Financing Statement which perfects the security interest.
Sounds good, but it's not that easy to recover even when you have a properly filed and perfected security interest. An action to recover your collateral is an action in equity and will likely have to be brought in a court of general jurisdiction, rather than a court of limited jurisdiction, such as small claims court. But the perfected lien does provide some benefit. If the subscriber files bankruptcy you will be a secured creditor and may be able to force payment or surrender of the collateral. If the subscriber wants to sell its business or refinance or borrow money your lien may present be a problem for the subscriber.
You should hire an attorney to recover the money owed to you. Start an action at law to recover the money, not the equipment.