Does this sound familiar? You are owed $16,000 by a customer who has become difficult and won’t pay. The AV installation at the customer’s house is almost completed, there’s just a few small programming jobs left to do. Most of the installation is sitting in cabinets, with speakers fixed into ceilings and walls. There are still a few tradespeople coming and going and the customer has not yet moved back into the house.

So, can you go back into the customer’s house and repossess the AV system?

The law says that if you have no written installation agreement signed by Mr and Mrs Customer, then you have no right to repossess anything. If you do repossess the AV system in those circumstances, you would be committing a trespass and may even be guilty of theft. If the customer sued, it is likely that the customer would win a damages award against you. Hello court case, and serious money.

But why? The law requires your AV installation agreement to pass four tests before you can repossess all of the unpaid for AV system.

1. Retention of Title clause: Without a ‘Retention of Title’ clause in your contract, the law says that customer owns the AV system the moment it’s installed. Without a ‘Retention of Title’ clause in your contract, the customer automatically owns the AV equipment and the AV installer can’t repossess it.

Our law says that only a contract can give a ‘Retention of Title’ clause, by which you own AV equipment until the customer has paid you for it. As a result, every AV installer should always have such a clause by his side. Don’t leave home without it!

2. Removal of Fixtures clause: Fixtures law says that you can’t repossess fixed-in equipment (i.e. fixed wall speakers) without a special clause signed by the home owner, irrespective of how much they owe you.

Under fixtures law, any equipment you fix-in to a wall or ceiling (such as fixed wall speakers) automatically becomes part of that house and is automatically owned by the home owner.

Your AV contract needs to actually say that the AV installer can remove fixtures.

3. Mr and Mrs Customer must sign the contract: Fixtures law also requires the agreement to be signed by all home owners, if there is more than one. This typically means it must be signed by both Mr and Mrs Customer. If the agreement is not signed by both home owners, you will only legally be able to repossess items that are sitting on their own weight (for example, amplifiers in cabinets).

4. You must register your interest with the online database: From mid-2011, changes to the law will require that you also register your interest in Mr and Mrs Customer’s property on an online database. If you fail to register, you may lose the right to remove that fixed-in equipment.

The database will be the personal property security database, established by the Federal Government to assist small business people to support their ‘Retention of Title’ clauses in their contracts with customers.

If your contract is with the builder then you can’t repossess fixed items in the house, unless you also get the contract signed by all the home owners and specifically include the clause giving you, the AV installer, the right to remove fixtures. Without the home owner’s signed consent to your repossession rights, you can’t repossess the ceiling and/or wall speakers, as they are fixtures and are owned by the home owners.

So, did your AV installation pass this test?

If your AV installations fail this four-point test, for the future you will need to adopt a tight, well-prepared contract signed by both husband and wife to allow you to repossess all unpaid for equipment, whether it’s fixed-in or sitting on its own weight.

Michael Leahy is a specialist business lawyer with over 30 years experience in contract law. He has prepared a simple one-page designer/installer contract package for CEDIA members, for $500 (plus GST). For more information call 0416 203 205 begin_of_the_skype_highlighting              0416 203 205      end_of_the_skype_highlighting or email [email protected].