All,

I have a client that wants to allow its clients (all incorporated
business entities -- no individual consumers) to pay over time after
construction is completed.  Terms would be anywhere from 3 to 24 months,
with accruing interest.  Does anyone have any experience with something
like this?  I am not sure if this counts as a retail installment
contract or a finance agreement.  Any assistance or thoughts would be
greatly appreciated.  Thanks.

--
Jason L. Molder | SWIMMER & MOLDER, PL
/Locations in Miami-Dade and Broward Counties/
Direct: (954) 688-3132
swimmermolder.com http://swimmermolder.com/

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Parts of your question are easy to answer. If the projects owners are all
businesses, then the goods and services provided aren't for 'personal,
family, or household use' and thus the financing arrangement isn't a retail
installment sales contract within the chapter 520 definition. While the
deferred payment arrangement could be described as a 'financing agreement'
the term is normally used (at least in my experience) for insurance premium
financing and in connection with bonds issued by various governmental
entities. Shooting from the hip, unless the clients are governmental
entities, where Chapter 287 might be implicated, I don't know of any special
forms, magic words or anything of like nature that would come into play.

If the owner's promise to pay in the future is to be unsecured, a simple
promissory note might do, That raises what is, in my cynical view, the first
real question.  What assurance does your client have that the owners will
pay. If payment is going to stretch out longer than three months post
completion, all lien rights will have expired and your client is left with
an unsecured debt. The typical approach would be a mortgage on the improved
property, but a construction lender or other mortgage holder might object to
junior mortgages. I'd recommend as many guarantors and as much additional
collateral as you can get. In my years of representing banks, I never met a
banker who thought he had too much collateral or too many guarantors.

Another thought relates to payment defenses down the road. That implies that
in the loan (financing) agreement the owner specifically acknowledge it has
inspected and accepted the work, the work complies with the drawings, the
work is fit for the particular purpose, the owner has no claims against your
client of any kind, and waives and covenants not to assert any future
defenses except payment. You can put that stuff in a note, though you risk
rendering the note non-negotiable.

Hope this helps.

Regards,

Lan White

(727) 797-5599

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From: clc-discussion-bounces@lists.flabarrpptl.org
[mailto:clc-discussion-bounces@lists.flabarrpptl.org] On Behalf Of Jason L.
Molder
Sent: Tuesday, February 11, 2014 5:34 PM
To: clc-discussion@lists.flabarrpptl.org
Subject: [CLC-Discussion] Payments over time to contractor

All,

I have a client that wants to allow its clients (all incorporated business
entities -- no individual consumers) to pay over time after construction is
completed.  Terms would be anywhere from 3 to 24 months, with accruing
interest.  Does anyone have any experience with something like this?  I am
not sure if this counts as a retail installment contract or a finance
agreement.  Any assistance or thoughts would be greatly appreciated.
Thanks.

--

Jason L. Molder | SWIMMER & MOLDER, PL
Locations in Miami-Dade and Broward Counties
Direct: (954) 688-3132

swimmermolder.com http://swimmermolder.com/

Florida attorney, law firm, or in-house legal department?  Click here to
join our e-discovery email list.
<http://visitor.r20.constantcontact.com/d.jsp?llr=ivedx5oab&p=oi&m=111557486
6600&sit=agkl99iib&f=db6c35f8-1e26-4f7a-b1c2-efe61804f812>

Note: This email may contain confidential or privileged information.  If you
are not the intended recipient, please immediately notify the sender and do
not retain  any electronic or hard copies of this email that you may have.

IRS Circular 230 Notice: Pursuant to United States Treasury Department
Circular 230, please be advised that, unless expressly stated otherwise in
writing, this communication (including any and all attachments appended
hereto) was not intended or written to be used, and cannot be used, for the
purpose of (i) avoiding any tax-related penalties, or (ii) promoting,
marketing or recommending to another party any transaction or matter
addressed herein.