When I was a youngster (at the time, McKinley may have been president), my mother applied for and received a charge plate from Jordan Marsh Co. in Boston. It was a piece of aluminum with her name, address and an account number embossed on it. The charge plate was used to create an ink impression on a tissue-paper slip used as a receipt for a consumer goods purchase made on credit.
At the time, I remember marveling over the fact that Mom purchased kitchen curtains (I think they were $5.98) and left the store without paying any money!
Fast forward to today, and I marvel (once again) at an offer I recently saw published online to buy pizza with a six-week loan.
For those of us who practice in the area of equity financing, this concept opens up a whole new vista of legal practice and can prove to be an endless supply of clients and legal work, not to mention the myriad of collateral services that will be necessary to support this new industry. Consider if you will, the following:
If you are going to finance your pizza, you will need to complete a pizza loan application. Your application will need a pizza appraisal, and of course you will be required to carry a pizza owner’s policy.
In addition, you will need pizza title coverage and possibly PPMI (pizza private mortgage insurance) if your income does not meet underwriting requirements.
If you are going to consume your pizza on the beach, you may be required to carry pizza flood insurance, especially on the incoming tide.
Performing a pizza title search might take you back beyond Boston’s North End, maybe all the way back to the Leaning Tower. You will need to find a firm, reliable starting recipe.
The appraisal for the transaction can prove to be challenging when dealing with “add-ons” that affect value. Your appraiser will need to consider the increase in equity associated with pepperoni, onions, mushrooms, etc. If you opt for sausage or Hawaiian, consider that such flavors may also increase your owner’s premium.
However, obtaining comps should be relatively easy. You have so many to choose from — Domino’s, Papa John’s, Pizza Hut, Regina’s, Santarpio’s … you get the idea.
The execution of a pizza promissory note and mortgage will certainly be a challenge to the people at the registry. How to properly index a pepperoni pizza has yet to be figured out. If it is a recorded pizza, the task may be somewhat easier. A registered pizza is a whole other story.
One must be careful not to get olive oil or cheese on the certificate of title when it is issued to the new owner. If there are certain odd items added onto your pizza (such as capers or cheese crust) you may also need to file a UCC pizza financing statement as part of the transaction.
A pizza finance closing presents its own list of challenges. Do you bring a pizza slicer to the closing? How do you notarize a pizza? And what about a final inspection before the closing?
No one has even mentioned whether or not a pizza loan can be e-filed. The discharge of a pizza encumbrance could also be a problem, especially if the original equity has been assigned to another pizza shop.
Then, of course, there are the inevitable bad pizza loans. Foreclosing on a defaulted pizza loan and mortgage should be pretty routine. A foreclosure notice filed in the Land Court (Pizza Division) might recite that two witnesses saw the note holder take an open and peaceable bite out of a slice of the pizza, thereby exercising dominion over the pie as a whole.
However, if the borrower refuses to surrender possession, that could be a messy affair, resulting in a run on stomach pumps in the region.
The bottom line is this: While I respect the trailblazer who decides to go with a business model of lending on pizza transactions, I think I’ll just stick with getting a plain cheese topping “to go” and pay with a $20 bill.
Tabasco anyone?
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Robert A. Cornetta is a retired judge who now practices law in Danvers.
