Thursday, November 30, 2006

A Response to Security for Your Lawsuit

I received the following interesting response to my last post. I am not endorsing this organization, but they may provide useful information for homeowners:

Many of the homeowners who contact us with builder complaints tell us that collecting is difficult. They have trouble finding good lawyers because of this. Homeowners are often prevented from suing because due to arbitration clauses. Of those that get arbitration or court awards, many have trouble collecting it. Arbitration has shown itself to have great potential for bias and abuse, and since it’s a private record, it hides complaints from the public when home buyers try to research builders before buying. Licensing agencies, (in the approximately half of the states that license builders at all), often protect builders more than consumers. Building codes aren’t being consistently enforced either. Many of the homes we hear complaints about have code violations, including serious ones that affect safety. The consumer is told by every state agency, code dept, etc, that they call, “It’s a civil matter! Get a lawyer!” That doesn’t do much good if they can’t collect.

Despite this reality, the homebuilding industry has pushed for its own brand of tort reform based on the unsupported claim that homeowners frivolously sue builders for millions, over “cosmetic imperfections.” Out the other side of the industry’s mouth, they claim each complaint is an “isolated incident!” I don’t see how it can be both ways! The tort reform is “Right to Repair” law, also known as Notice of Opportunity to Repair, and other names. It has passed in about 30 states now despite vetoes and opposition. Many times all the public knows about these laws is the building industry propaganda touting it as consumer protection. Naturally, a law created by builders will favor builders.

Everyone operating HADD is a volunteer who does, or did, have a problem with a builder. We’ve seen homeowners lose everything due to shoddy construction, breach of warranty, non-enforcement of laws and codes, predatory lending by builders’ in-house mortgage co’s, and outright fraud.

Thanks again for your article.


Cindy Schnackel
National Secretary, Homeowners Against Deficient Dwellings
HADD Petition:

Tuesday, November 28, 2006

Security for Your Lawsuit

Two weeks ago I obtained a judgment for a client against a contractor in the amount of $215,000.00. This included triple damages, attorney's fees, interest and costs. It was a great victory, but there is a problem: the defendant is virtually judgment-proof.

In any lawsuit, a cost-benefit analysis needs to be done to determine if it is worthwhile to pursue a claim against a defendant. The money spent has to be balanced against the ability to collect a judgment if it is obtained. The best way to secure a potential judgment is to move for prejudgment attachments. The most common asset to attach is real estate.

In Massachusetts, the plaintiff must demonstrate a likelihood of success on the merits (the he or she will probably win), and that the defendant does not have liability insurance to satisfy a claim. It the attachment is done "ex parte" (without notice to the other side), the plaintiff must also show that the defendant is likely to convey the property if given notice, or that the defendant is not within the jurisdiction of the courts.

Homeowners or home contractors can move for prejudgment attachments, but home contractors have the mechanism of the mechanic's lien available to them, so in their case, it is more rare.

In almost all of my cases, I move to attach an asset, because no one wants a lawsuit to just be an exercise in frustration or waste of money. So, parties to an agreement should try to get as much information as they can about assets from the other side (properties owned, other jobs, motor vehicles, bank accounts) in order to protect themselves if something should go awry.

Although it may appear distrustful, it provides insurance in case something should go wrong. In a subsequent post, I will discuss mechanic's liens.

Falling Down on the Blog

I know that my posts have been infrequent over the last two months, but I have some exciting news about developments in my practice. I have moved to a new office, and my new contact information is listed in my profile. In addition, I have hired a full-time assistant, which will hopefully leave me more time to post.

I plan to post on some recent cases that have affected the law regarding homeowner-home contractor issues. I will also continue to provide advice about how to avoid the common pitfalls that can occur. More posts to come...

Monday, November 13, 2006

What If You Need to Hire a Contractor

The following link offers a useful article about hiring a home contractor:

Sunday, November 05, 2006

When the Cost of Materials Increases

Most contractors start out on the same page as the homeowner. It is their goal to create a successful result that they can be proud of, and that will make the homeowner happy. Relationships usually begin on a good note. One of the issues that can derail a project, however is when the cost of materials increases. An unforseen hike in prices can cause a dramatic decrease in the contractor's profit and cause him or her to feel the need to cut corners in order to get the job done. The question is, how can this be avoided, and what should a contractor do if this happens?

As always, a good project starts with a good contract. When a contractor hands a homeowner a proposal, that proposal should have an expiration date. Individuals vary greatly in their timeline for making a decision and implementing a renovation or addition. A homeowner may take a proposal and then end up being delayed in starting a project for any number of reasons. A contractor should not be forced to stick with a quote that may no longer be appropriate after a period of time.

A good contract will have a start date and end date for a job, but it will also have allowances for delays. If the homeowner delays, there may be one remedy, if the contractor delays, another, and weather conditions, etc. can cause unforseen delays. In any of these scenarios, a significant delay can result in a dramatic increase in price of materials. For this reason, the contract should build in an "out" for the contractor if prices increase by more than a certain percentage, or even for an opportunity to re-evaluate material prices or allowances if delays occur.

What if the contractor has not addressed the issue of an increase in cost in the contract, and/or doesn't have allowances build in? At that point, I think it is better for the contractor to "fess up" with the homeowner, rather than lose interest in an unprofitable job or cut corners in other areas of the work.

Most people are reasonable. If something is going to cost a great deal more than anticipated, it is better to view the renovation as a partnership and ask the homeowner to work with you. You can always sweeten the deal by throwing in an extra at less cost to yourself. For example, if the price of teak increases, but you can get a deal on cherry, you might agree to throw something in (an extra shelf, doors on a cabinet, etc.) as an acknowledgment that something unexpected has occurred.

It is better to deal with the issue when it arises than to have a homeowner discover after the fact that work was done in an inferior fashion or cheaper materials were used. After all, that good feeling that existed at the beginning of the job should hopefully continue all of the way through. This will result in much more good will at the end.