Faulty Notice: New York City Debt Collection

notice-of-default-foreclosure-chicago-400x275Many contracts require that the non-paying or non-performing party be given notice of their default. The agreement would further provide a set time frame in which the party has to cure their default, how the notice should be given; in writing, by email, fax, to whose attention, and the manner of delivery of the notice i.e. overnight mail, by courier.

Today, when most accounting and collection functions are computerized, something requiring special handling may fall through the cracks. Notice of default may have been sent by regular mail to the accounts payable department rather than the general counsel’s office as required by the contract. Or, perhaps notice of default was sent to the non-paying party’s home address as oppose to their business address or both as required. When notice of default is not given as specified in the contract there can be a detrimental impact on your New York City debt collection case.

Questionable notice is an issue in a case we are handling at this time. Our client financed the acquisition of a yacht. During the term of the loan the borrower defaulted by failing to make payment as required. Notice of default as provided in the agreement was given and the buyer cured his default by making payment and reinstating the contract to the clients satisfaction.

Another payment was missed shortly thereafter. Our client sent notice as required the contract; in writing,  by certified mail return receipt requested and regular mail to the borrower’s address. The agreement provided that the borrower have  time to cure his default by making payment but, he failed to do so and remained in default thereby allowing the client to take the next step.

In accordance with the underlying agreement, our client repossessed the vessel and took the steps necessary to sell the vessel through commercially acceptable means at auction. The monies realized at auction were deducted from the balance owed and the borrower pursuant for the difference, the deficiency amount.

Our case began by demanding the deficiency balance for which we filed suit and the borrower is defending. There is no question in this case that the borrower signed the loan documents and was liable for the payments as agreed therein.

The issue at hand is the “notice”. The borrower claims to not to have received notice. The client has the proof of mailing with the stamp green card indicating notice was sent by certified mail return receipt requested signed. The borrower claims the signature belonging to someone other than him. The issue is whether the client was merely required to send the notice or if the borrower was required to receive the notice. Although it’s a pretty straightforward question which should be answered by the contract, the contract is clearly ambiguous as to whether or not the requirement to advise of a default is sending the notice or the borrower receiving notice.

Although terms may appear to be clear to one party, there may be room for ambiguity which could impact your NewYork city debt collection case. A notice requirement appearing to be straightforward may not be. Make sure your contracts provide for clear terms and that you are aware of them in advance of default so that you can perform.

If you have questions about your contracts, notice requirements, rights therein or wish to place a claim contact, Jocelyn Nager, Esq.

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