QUESTION
Can I place a lien on a person's house if money is owed from a business venture?
Asked on Oct 30th, 2017 on Breach of Contract - Florida
More details to this question:
I entered into a business agreement with a friend in which I loaned money (via mortgage) to purchase a pizza restaurant. The signed agreement included repayment of the money loaned plus 4% of gross sales weekly. When money was tight I was asked to delay writing my weekly 4% check until business improved. Since my friend had proven trustworthy in the past, I agreed to delay the weekly checks from time-to-time as needed. This went on for just over 10 years. When the restaurant sold, the original loan was repaid in full, however, the 4% weekly checks were not. The total owed to me over the time we owned the restaurant is over $93,000. My friend does not have the money to pay this. My thought was that if I was to place a lien against his house, he will eventually have to make good on our original agreement, even if I have to wait until his house is sold.
1 ANSWER
Unless you have a contract providing you with the right to place a lien on his house even before you have won your dispute, you can't do so until and unless you have sued and obtained judgment in your favor. From your question I can tell that you will have several obstacles to overcome in order to prevail in such a suit. First, the statute of limitations. By your account, the first breach occurred more than a decade ago, well beyond the statute of limitations for a breach of contract claim. You contend that the contract was modified, apparently orally, and you agreed to defer interest payments,so that the breach didn't occur until you weren't paid after sale. While this may be true, I'm not sure you can prove it, and it is likely that your written contract, if it was drafted by an attorney, provides that it can't be modified orally. Also, if the transaction is treated as a loan, rather than an investment (which seems likely; investments can be lost if the business does poorly, but allow you to share in the profits if the business does well - since there doesn't seem to be any risk of loss here, it looks like a loan to me) the 4% of gross sales is likely to be considered interest. If so, unless gross sales are very small compared to the amount of the loan, this amount is likely to be above the legal limit for interest. It is not legal to charge any interest you want, for example the limit for interest charged against an individual in NY is 16% annually; I don't know what it is in Florida. Another issue is who was responsible for repaying you, your friend or his business. If it was his business, and the business is an entity (e.g. a corporation or an llc), your friend is not, on the face of it, PERSONALLY liable for the interest payments, the entity is, and if the entity has no money, you're out of luck. You can't satisfy your claim against the entity from your friend's PERSONAL assets, although there are exceptions which allow you to "pierce the corporate veil", and I don't know enough facts to know if you have any chance to do that. Finally, when you accepted the check for the principal, did you reserve any rights to claim the rest? If not you may (I emphasisze may) have waived your right to claim more.
Answered on Oct 30th, 2017 at 1:20 PM