Legal Question in Business Law in New York
default on promissary note secured by a UCC agreement
We sold our business and have a 2 year promissary note which secures the equipment by a UCC agreement. The purchasers made 11 payments out of 24. This month's payment is late. There is an accelerated payment clause after the 15th of the month in which the entire note is due. Purchase signed as a representative of the business and personally. I am listed on his insurance policy as the mortgage holder. What do I need to do to get the equipment back so I can sell it?
Thank you
2 Answers from Attorneys
Re: default on promissary note secured by a UCC agreement
It depends on the language in the contract. Most contracts call for notice prior to default. Most of the time a creditor will give notice - even if not in the contract - because it is easier and cheaper for you to remind the debtor about his payment obligations than commencing a lawsuit.
Mike.
Re: default on promissary note secured by a UCC agreement
Mr. Markowitz's advice is sound. However, you may consider a different approach. Since the claim is based on a promissory note you could consider: sending an acceleration notice and a demand. Assuming it is ignored, you can file a motion for summary judgment in lieu of a complaint along with a summons. This will bring the debtor into court in about 30 days or so (depending on how you serve them) where they will likely loose in very short order. Give the judgment to the clerk, once the clerk enters it, give the entered order to the sheriff . . . get your money. This assumes, among other things, that the contract does not foreclose your use of this section of the civil law (most contracts are silent on the matter) and that the contract and note are distinct instruments.
If you have any questions feel free to call my office for a consultation. 518.697.7944.
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