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Do I owe these "fees" or am I the victim of extortion?
Anonymous3 views2 answers
We owe a considerable sum on a promissory note secured by real property and we had originally made a request for a two month extension to the note holder. The request was made two weeks prior to the date due, the note holder did not respond but instead we were contacted by their attorney and two month extension was granted prior to the due date of the note. We are in the process of selling the secured property to satisfy the note. The attorney is demanding we pay "collection/attorney fees". The attorney has informed us via email that if we do not pay these so call fees, they will file suit against us for a myriad of things.
So, where to from here?
Any well drafted promissory note provides for attorneys fees in the event of default requiring attorney's services for collection. Notes provided by title companies for deeds of trust are certain to have such clauses. The amount of the fees are generally subject to the control of the court if it goes to court My question is "Has there been a default requiring attorney's services?" You have offered to perform and the attorney granted an extension, so you are not currently in default. So the attorney has some grounds for the fees, i.e., it is not extortion. Why not contact the noteholder to see if he can restrain the attorney?
DISCLAIMER—This answer is for informational purposes only under the system, its terms and conditions. It discusses general legal principles, trends, and considerations and is not intended as specific legal advice regarding your question. Each state has different laws and the answer could be different if all the facts were known. Full evaluation of your legal situation would require personal consultation permitting an understanding of all the facts and circumstances. This answer does not establish an attorney client relationship.
(Bryant) Keith Martin
sbbizlaw.com
You need to review your note to see what it says about being liable for legal fees. I'm betting that it says only if you're in default will you be liable for the hodler's colection costs, and not just any legal fees the holder incurs in the course of the note's duration and not just any legal fees related to the note.
Since you did ask for an extension, and that's something of value to you, and that's in place of the holder finding you in default, so you have to give the holder something in return, "consideration" for that 2 months of forebearance. Maybe more interest? Or maybe something towards their legal fees? This, like other things in this transaction, is negotiable, and you need to sure you that whatever deal you come to is in writing and that you understand completely anything you sign before you sign.
Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.
