Q:I own a sporting goods specialty shop where we also do repairs, and we collect payment upon completion of the work. In some cases, we have customers who just leave their property with us after completion of our work. We tell them that if the item is left for more than 30 days following the completion date, the property becomes ours. Is this legal? If not, what are our alternatives?

Answer:

Most states have statutes which grant a lien in on an item created or repaired by a service provider and for which the provider has not been paid. In nonlawyer speak, this means you can hold the item as security until you receive payment. (In Florida, this even extends as far as your vet being able to hold your pet as security for services--but I digress.)

If you have a lien, then you can use the court system in your state to enforce the lien and satisfy the debt through sale of the item. This can be a fairly complex process, depending on your state and county, so you should consult with an attorney or other collections professional. If you were to save up all these items and do them in bulk, or outsource the process to a third party, it might be financially worthwhile.

If the customer has paid you for services, you have no right to withhold the property from its owner. It would be a good idea to remind the owner the item is waiting and warn them of what will happen if the owner doesn't come and collect it by a deadline.

It is wise to check the law in your state regarding unclaimed property to be sure that the property in question does not fall under "unclaimed property" regulations. These regulations typically require banks and fiduciary agents to forward unclaimed funds usually from dormant accounts in financial institutions, insurance and utility companies, safe deposit boxes and trust holdings to the state for keeping for the owners. Failure to promptly forward such items can result in fines.

Rightful owners can usually claim their property at any time. In Florida, for example, the state holds more than $800 million (see http://up.dbf.state.fl.us) in unclaimed property.

As an alternative, you could have your attorney draft a contract in which the owner agrees that you may charge her credit card for the amount of the services upon completion if she fails to pay or fails to claim her item and that she agrees to your disposal policy for unclaimed goods. Furthermore, you can limit liability, waive warranties and accomplish other helpful legal objectives in the process. These contracts can be drafted concisely into a single page and, correctly written, would be enforceable and potentially get the quickest and easiest result for your business.

All answers are general in nature, not legal advice and not warranted or guaranteed. Readers are cautioned not to rely on this information. Because laws change over time and in different jurisdictions, it is imperative that you consult an attorney in your area regarding legal matters and an accountant regarding tax matters.

1 Readers are cautioned not to rely on this article as legal advice as it is
no substitution for a consultation with an attorney and an accountant in your state. Based
on jurisdiction and time, the law varies and changes.