Lawsuits

[qhinspect]

There was an article that was posted somewhere where the home inspection company was sued for not reporting certain defects and that company lost. If this company had no assets and the owner had no personal assets, what is the worst thing that can happen?

This guy owes the home owner a lot of money from the judgement but I don't know how that home owner is going to get it. I also don't know why this guy can't keep doing home inspections.

If anyone knows the answer, It will be interesting to hear.

[qhinspect]

Wow, no response.

[mthomas1]

If you actually have no assets, or assets of little value, you probably won't even get sued.

Back in the day when I used to hang glide I knew a guy by the name of Bill Bennett who manufactured hang gliders. Obviously, people who used the products occasionally got seriously hurt or dead, and the accident victims or surviving spouses were often determined as sue - being paralyzed from the neck down for life or losing a loved one is the sort of thing that tends to seriously tick people off.

Bill just told they the truth: the only asset in his name was a hang glider company, and its only assets were a stack of aluminum tubes, some simple fabrication equipment, some nylon cloth and some industrial strength sewing machines, all of it used, and all of which he would probably buy back at auction for pennies on the dollar when the business was liquidated because its only value to anyone else with salvage and scrap, at which point he would just start another hang glider company.

The lawyers would look into the matter, discover he was telling the truth, and tell their clients "If you want to go forward you're going to have to pay cash on the barrel head, because there's no way my fees will be covered by Bennett's assets. And even if you succeed, it's going to be virtually impossible to extract the judgment from him."

OTOH, there is no way to protect 'your' assets, you genuinely have to transfer them completely into the control of someone else prior to the event that triggers the suit - so you better really trust your wife, or your husband, or your child, or whoever - because if they tell you to take a hike and retain the assets, you have absolutely no recourse (other than the decision of the court to distribute some portion of the marital assets to you as part of a divorce settlement) to recover them.

The case of the home inspector who is being sued for negligence as a result of an inspection they personally performed is somewhat different because you will be personally liable for at least a portion of the judgment, but again if you actually have no significant personal assets as I understand it you are unlikely to be sued, if for no other reason than an attorney will see little prospect of being paid for their services.

[Rocon]

Wow, no response.

OK I will take a swag at it.

The judgement can be filed with the county. This will be recorded for 7 years (I believe) the filing can be renewed after the seven years with an additional fee paid to the county. I believe this can be continued in perpituity. If the "person" moves out of the county an abstract of judgement can be filed wherever he goes. The net result of this is: if the person ever gets some assets they can be attached. This process is driven by the person holding the judgement. The homeowner can sell the judgment to a collection company and they will then pursue recovery of assets from the person. If the person gets a job working for another company the judgment can be used to garnish wages from that job.

I see no reason the inspector can not continue doing inspections for his own company or set up another company to do buisiness as.

Bankruptcy can remove the judgement from the persons credit report. If the judgment has been filed then additional measures must be taken for the adstract or lien to be included in the bankruptcy. In which case the Bankruptcy stays on the credit report for either 7 or 11 years (I am uncertain).

It has been my experience that getting a judgment against someone woth no assets or knows how to shelter them is useless.

[Marc]

In some states where E&O is required, it perhaps doesn't matter how little your assets are. Insurance companies are unlikely to cover you if there's a lawsuit in your past, so you'll not be able to inspect again in that state.

Marc

[inspector57]

In Texas, you must have E & O insurance and as far as I know there is still a state operated recovery fund that is for consumers and funded by home inspectors upon licensing. If the state pays out of the recovery fund, the offending HI looses his license until the judgment is repaid to the state. No license, no inspections.

[Marc]

In Texas, you must have E & O insurance and as far as I know there is still a state operated recovery fund that is for consumers and funded by home inspectors upon licensing. If the state pays out of the recovery fund, the offending HI looses his license until the judgment is repaid to the state. No license, no inspections.

That's brutal!

Marc

[sepefrio]

Brutal maybe but also VERY nice.

First, that fund is funded by all contractors not just HI's

Short version, I paid a company for new kitchen, owner cashed my 1st installment check and disappeared. Took me almost 2 years going through the fund but I got every penny back plus legal expenses. Owner has a warrant out for her arrest. I have a new kitchen.

[Nolan Kienitz]

In Texas the Recovery Fund is only funded by the HIs. Not by all contractors. And it still exits.

When E&O was put into rule from the legislature we did not get any of the Recovery Funds back nor was the fund done away with.

No it is not nice as once the individual goes through the TREC fund they can then go after you via your E&O.

In Texas it is a "double-hit".

[sepefrio]

I meant nice from the consumer stand point when they honestly do get screwed over.