Legal Question in Business Law in California
recouping of debt
if a customer owes my corporation money & it's over 90 days late, can we sell raw materials & inventory that belong to them to recuop for our labor cost. In addition there materails are taking up space in our factory.
2 Answers from Attorneys
Re: recouping of debt
If the customer supplied the materials, they are not yours to dispose of without following all the lien sale requirements. If they are buying them from you, you can do as you need with your own supplies. Get legal help if you intend to lien sale.
Re: recouping of debt
You probably have a possessory lien on the raw materials and inventory, but that is not quite enough to pass title to you so that you can sell them without meeting special sale requirements.
See Civil Code section 3051 for a legal description of the type of lien you have, and section 3052 for legal requirements that must be followed if and when (or before) you sell the property.
I'd recommend retaining a lawyer to assist you with a sale if the value of the property is significant, perhaps if it's over $10K or so.
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