When a business stops paying, the temptation is to send a demand letter and file suit. That may be appropriate. But it is a mistake to treat a missed payment as the whole analysis.
Before taking action, a creditor should determine who owes the debt, what collateral secures it, whether the contract requires notice and a chance to cure, and whether the creditor can prove it did what the contract requires.
This is the first article in a three-part series on the early decisions that shape a Florida commercial collection case.
Confirm the Parties and Collateral
Pull the complete file: the note or contract, account statements, guaranties, security agreement, UCC filings, amendments, correspondence, and payment history. Confirm the borrower’s current legal name, each guarantor, and the collateral description.
Do not assume an old UCC filing remains effective. In 1944 Beach Boulevard, LLC v. Live Oak Banking Co., the financing statement identified the debtor as “1944 Beach Blvd., LLC,” rather than its correct name, “1944 Beach Boulevard, LLC.” The Florida Supreme Court held the filing seriously misleading and ineffective.
The point is not subtle: a secured creditor should run a current UCC search through Florida’s Secured Transaction Registry under the debtor’s exact legal name and review the filing itself. Check the jurisdiction, collateral description, amendments, continuation date, and any change in the borrower’s name or organizational structure.
Read the Notice Provision
A missed payment may not permit immediate acceleration or suit for the entire balance. The note, guaranty, lease, security agreement, or forbearance agreement may require written notice, a cure period, a demand, or notice to a particular address.
The creditor must be able to prove compliance—not merely produce a copy of a letter.
In Christ v. Deutsche Bank National Trust Co. Americas, the mortgage required a written default notice, at least 30 days to cure, and either first-class mailing or actual delivery. The lender offered images of two demand letters and vague prior-servicer notes. The letters contained no indication of mailing, and the witness had no knowledge of the prior servicer’s mailing practices. The court held that this did not prove the letters had been mailed as required and reversed the foreclosure judgment.
While Christ is a mortgage case, the core point is contractual. If notice is a condition to a remedy, the creditor must prove that it gave the notice in the contractually required way.
Avoid a Mailing Dispute
The answer is not complicated, but it requires a process.
Florida Statutes section 90.406 permits an organization to prove that it acted on a particular occasion through evidence of its routine practice. A creditor can therefore establish that a particular breach letter was mailed through competent testimony from a witness who knows the sender’s regular process for preparing, mailing, and recording those letters. That evidence may support a rebuttable presumption that the notice was mailed. In Christ, the court cited CitiMortgage, Inc. v. Hoskinson, 200 So. 3d 191 (Fla. 5th DCA 2016), as an example.
That did not help Deutsche Bank because its witness did not know the former servicer’s actual procedures. The witness could not fill the gap by describing how other servicers generally handled notices.
A creditor can reduce the risk of that problem by doing the following:
- Read the notice clause before sending anything. Follow its required recipients, addresses, content, cure period, and delivery method.
- Keep the final notice and every attachment exactly as sent.
- Create a contemporaneous mailing log identifying the date, recipient, address, account number, document, and delivery method.
- If first-class mail is required, use first-class mail. Certified mail or overnight delivery may add useful proof, but it does not necessarily replace the method the contract specifies.
- Preserve USPS certificates, tracking records, courier receipts, returned envelopes, and delivery confirmations.
- Use a written mailing procedure that staff follows consistently.
- Keep a witness available who can explain the actual mailing process used by the entity that sent the notice.
Conclusion
A payment default, a notice of default, acceleration, and a lawsuit are separate events. Keep a clear timeline of each, along with partial payments, workout discussions, and prior litigation.
The point is to act promptly, but only after confirming the paper, the lien position, and the required notice.
Next in the series: Personal Guaranties After a Business Default: What Florida Creditors Should Review Before Suing the Guarantor. A guaranty may appear straightforward, but its wording can determine whether the creditor may proceed immediately, what notices or demands are required, and what defenses a guarantor may still raise.
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