Debt Collection Attorney’s Blog: Selling to Managing Agents/Collecting From NYC Owners

Debt Collection Attorney

If you are like most NYC businesses selling to the ‘powers that be’ in New York real estate you are selling to managing agents rather than the owners directly. Debt collection attorneys often see that most buildings are represented by managing agents who order goods and services to keep the buildings running. The agents work with you as extensions of the owner. Most often the agents represent many buildings and will engage you to provide services or goods to numerous buildings. Relationships with good managing agents are vital.

When it comes to paying you, the owner of the building needs to authorize payment. The managing agent does not on its own tender payment to you. What happens then if you are not paid? Since your contact is with the managing agent, who do you ultimately look to for payment?

Your debt collection attorney will tell you that the law of agency applies here. If you are doing business with an agent and the owner or property to which you are selling is known, “a disclosed principal,” the law requires you to pursue the owner for payment. The managing agent has the authority to “bind” the principal owner and make decisions/purchases on their behalf. However, if the agent requests goods or services from you and does not make the owner known, you must seek payment from the agent.

Common issues when pursuing the owner directly:

  • The owner may claim that the agent had no authority to “bind” the owner for the transaction and that you need to look to the agent for payment. In that case, you may need to bring both owner and agent in the case and let them battle it out while you move the case along.
  • The managing agent may have induced you to sell or perform for numerous buildings. Almost every building is a separate legal entity which must be named in a lawsuit if payment is not made. Sometimes you can bring all owners in one case. However, the more parties involved the more complex the case may appear to the Court and the less likely you can win on the papers. Your debt collection attorney may guide you to bring separate actions against each entity rather than one action depending on the facts of the case and underlying relationship between the buildings.
  • The building was sold or ownership was transferred. This means any judgment obtained against the past owner corporation or LLC may be uncollectable (assuming there are no assets belonging to the former owner including payments from the new owner). A plaintiff’s debt collection attorney will conduct research to ascertain whether a suit and potential judgment will produce a payday at the end of the day or would be a waste of the client’s time and money.
  • If the building(s) are about to be sold, you need to move quickly. Take fast action to make sure monies will be held in escrow at closing.

You need a plaintiff’s debt collection attorney that understands selling and collecting from New York real estate owners that can think out of the box, have the ability to get this done and get you paid. Please contact (212) 686-0100 or email jnager@ffgnesqs to get paid.