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Best way to recoup loss from contractor?

Posted by drymanhattan (My Page) on
Wed, Aug 21, 13 at 0:40

I am facing a loss of about $10k from an error by my contractor, who has been paid. The engineered wood floor he laid on our below-grade concrete slab floor totally failed three months later. The manufacturer of the product and the engineer's report from our insurance company concurred that it should never have been installed in the first place. So now what? I have little hope of recovering anything from the general contractor or the subcontractor he hired to do the floor. I learned too late that both of their licenses have expired which means they have no insurance. Has anyone had luck with small claims court in a case like this? Can the loss be taken as a tax deduction? And if so, what do I need to do to document the loss?


Follow-Up Postings:

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RE: Best way to recoup loss from contractor?

I believe your best bet is small claims court. Your only cost will be the filing fee, and a judge won't care if they have insurance or not.

The only glitch would be if the companies have declared bankruptcy. Because you can't go after them personally if they are incorporated.


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RE: Best way to recoup loss from contractor?

If you go to Small Claims Court and win - you will get a judgment, not money. You then will need to file your judgment with the proper recording authority and go through the process of attaching assets. So, it's a good idea to make sure there are assets before you start the entire Small Claims gig. Once you get your judgment filed - you have to put a lien on the assets and liquidate those assets. Depending on what type asset - this might mean a foreclosure or a sheriff's sale. And remember your lien would be behind any prior liens (first mortgage or car loan).

I'm so sorry.

/tricia


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RE: Best way to recoup loss from contractor?

If you go to court and get a judgement ask the judge to set the order so that the judgement can be renewed if they don't pay with in the set number of years. That way their credit will have a bad rating.


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RE: Best way to recoup loss from contractor?

Sorry for the mess. It seems contractors are always being sued on the tv court shows. One thing you will absolutely need in court is DOCUMENTATION. Your written agreement of what the contractors promise to do with price. Your proof of payments. Pictures of the mess, good pictures. Then, importantly a document from the manufacturer stating it was improperly installed and the engineer's report of the same. Documentation is key in any court proceeding. Most small claims courts have a limit, some only $5000, so check it out. Once you get the judgment after a period of time you can execute the judgment. Two ways - either file for wage attachments, doesn't matter what job the workers have now, but you need proof of their employment. Or if they don't have wages then you hire a constable and go to the contractor's house with him and physically confinscate items of his up to the value of your judgment. You might want to "google" small claims laws in your state.


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RE: Best way to recoup loss from contractor?

I have never heard of being able to confiscate personal property, with a constable because someone owes you money. Now if he has a valuable antique auto collection I am sure the court can attach that for payment, but you can not go into someone's home and take their furniture or their only transportation. Even a judge wouldn't allow that.


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RE: Best way to recoup loss from contractor?

Small claims courts often have a low limit on what you can collect...say $1000 max, though it varies by area. If this contractor was a licensed contractor, he was required to be bonded and insured. You should check with your State Department of Labor or equivalent. If he is not licensed, you have leverage as you can threaten him with being reported. If he is licensed you need to ask the State folks what you need to do to submit a claim to collect damages from his insurers.


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RE: Best way to recoup loss from contractor?

Google "executing a judgment". It seems each state has different procedures but what it amounts to is filing papers with the sheriff listing what you think the person owns valuing the amount the judgment is for. Then the sheriff goes there, takes the stuff, gives you an itemized list, sells the stuff at an auction and you get the $$$. Totally a legal process.


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RE: Best way to recoup loss from contractor?

I really don't think you can legally do that. I think you have to have a specific court order listing what you can take to get anything from a home owner's personal stuff. No individual can point to this and that and take it even with a judgement.

There has been a myth floating around for years about evicting renters by getting a police officer to go with you after the 30 day notice is up and the officer can make the tenant leave. That is not legal, everyone gets his day in court. I don't think this is either. Call the local DA's office and ask them about it.


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RE: Best way to recoup loss from contractor?

I agree with Emma. The idea of going and having the contractor's possessions confiscated and auctioned off, and of the proceeds being provided to you, and you being made whole this way is a highly unlikely, if not downright impossible, possibility. The police or sheriff's department is not in the business of collecting your debts for you. More plausible alternatives have been described above.


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RE: Best way to recoup loss from contractor?

Here's what you are all missing.... you have to have a JUDGEMENT first, which is a legal court-ordered order to pay. Yes, and then you can seize assets. But the court has to issue the judgement.


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RE: Best way to recoup loss from contractor?

Thank-you sushipup. All you have to do is "google" "executing a judgment" and read the following ways to do it, it is legal when done legally. In some states if the person works you can attach their wages same as child support.


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RE: Best way to recoup loss from contractor?

You and a police officer even with a judgement cannot walk up to someone's home and confiscate anything. What would you do.....take their bed, their children's beds, their refrigerator, stove?????


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RE: Best way to recoup loss from contractor?

I'm not saying it's totally impossible. But your likelihood of success without spending a lot of time, money, and aggravation makes it impractical. It's a last resort, and any judge is going to ask what simpler and more direct methods you tried before the "nuclear" option.


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RE: Best way to recoup loss from contractor?

No one would get anything from my home like that. They would have to have a sheriff with a current order, (not the original judgement) to remove my doll collection, which dolls or all of them or our car collection which cars or all of them, only specified items on the order.


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RE: Best way to recoup loss from contractor?

Emma and others...

Read up on the Right of Replevin. Yes, you can just take a creditor's possessions if you have a judgment. Replevin is rooted in old English common law and goes back centuries. You'll need a sheriff though to enter somebody's personal residence.

I spent my career as a banker. One of my more infamous instances of exercising my Right of Replevin involved a man who owned a mobile T-shirt factory (a trailer that he took around to fairs, festivals, parades, etc.). I'd been trying to snag assets for several months unsuccessfully. One day, I drove by his home and spotted said trailer in his driveway. I immediately called a tow truck and had them grab the trailer. The guy was furious and tried to have me arrested. (grin) But, as long as I didn't "disturb the peace" - I had the right to grab the trailer. The next week, I auctioned it off and applied the proceeds against the judgment. All perfectly legal. I kept picking away at him until there wasn't much else left to snag. I also took several show dogs from that guy. When the dogs went out to pee - I had an ex-Animal Control officer working for a repro company take them. Again, perfectly legal. If you sign a note then you need to pay. As I said in my first post at the beginning of this thread though you first have to obtain the judgment.

/tricia

Here is a link that might be useful: Right of Replevin


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RE: Best way to recoup loss from contractor?

Old English law could send you to debtor's prison also. I think if the guy had money he could have sued you unless you were repossessing the trailer because it was mortgaged at your bank. Banks, loan companies and people who repossess property do a lot of bluffing.


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RE: Best way to recoup loss from contractor?

No Emma. The trailer was not mortgaged. The trailer was an asset and I was entitled to try to recover some of the bank's money by confiscating/selling assets while avoiding "disturbing the peace". He had no basis to either have me arrested (though he tried) or to sue the bank or me personally. He had defaulted on a debt. I had obtained a judgment against him. I went about collecting the bank's funds. The law is pretty clear and I was not bluffing. My employer expected me to recover as many charged-off loans as possible...and I did.

/t


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RE: Best way to recoup loss from contractor?

I am late to this party but I will share my brief experience. It was many years ago and in the state of Florida so it may not apply to your situation.

I had a roommate who, in addition to several small loans, ran up the phone bill to the tune of a couple of thousand dollars, calling overseas. I took her to small claims court and won a judgment against her. It was at that time that I learned that it was basically up to me to collect the money she owed me. I could file a paper (for a fee) that would entitle me to my money if she ever sold her house. She didn't even own one at the time. I could file a paper (for a fee) to have a sheriff collect her vehicle and sell it. I would need to pay something for them to actually tow it and then pay storage for the time between when they seized it and when they sold it. I forget what my third (legal) option was but it would have also cost me additional money. In the end, it would have cost more money for me to collect than what she owed.

I did get a fraction of the money back but I eventually let karma take care of the balance.


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RE: Best way to recoup loss from contractor?

sapphire,

You are so right. But, you could have added your filing fees and collection expenses to the judgment. Had she owned a house you also could have foreclosed your judgment subject to any other loans filed against the property with priority such as a first & second mortgage, taxes, or mechanic's liens. There would have been no reason for a mortgage holder to buy you out at the foreclosure sale so you would have ended up owning the house subject to any mortgages - if there were equity though - it would have been yours (most states have laws regulating this so you couldn't have walked away with, say, $100,000 in equity for a $5,000 debt.)

/tricia


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RE: Best way to recoup loss from contractor?

Thanks, Tricia! I wish I had known you twenty years ago! Always the enterprising type, I'm thinking that sounds like a good business to set up -- consulting with people on how to collect on their judgments.

To the OP, one other thing I forgot to mention that may have been mentioned above is that there was a limit of $5000 in small claims that you could receive a judgment for. Any higher than that and I believe you would have to pursue them in a different court.

Good luck!


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RE: Best way to recoup loss from contractor?

Upper limits on small claims courts vary widely by state.


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RE: Best way to recoup loss from contractor?

My story in a nutshell:

Received a judgment against a landlord for 2K. Landlord moved to another state. I found an attorney in the new state who would take the case on spec. and was willing to take it to garnishment of personal property if necessary.

LL declares bankruptcy - discharges judgment. Game over.


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RE: Best way to recoup loss from contractor?

Yep, xminion, with unsecured debt there's always that risk.

There is an automatic stay issued with all Chapter 7 and 13 filings. The BK automatic stay includes even secured debt. A lender must request the Court to lift the stay in order to liquidate collateral. Sometimes, that can take months. A BK judge has broad power. With nearly 30 years experience as a lender though I can say with some certainty that most people do not file BK except as a last resort. Sure, there are exceptions but there are exceptions in every situation. In the US, we do not want debtor's prison, hence, our BK laws. Most BKs are due to medical expenses or loss of employment. I'm sorry though you had a loss.

/tricia


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RE: Best way to recoup loss from contractor?

tricia,

Thanks for you input.

In my court case, I was able to find out this was the LL's THIRD BK. It was a way of life for him to rack up bills he had no intention of paying off, then he'd file for BK.


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RE: Best way to recoup loss from contractor?

I'd consult an attorney on this one. You've got a number of issues here, including the apparent refusal of you insurance company to cover the loss. Don't automatically accept their refusal to cover it because you may live in a jurisdiction where courts have held that losses from faulty construction are covered by homeowners liability insurance.

If you do decide to sue your builders and actually get a judgment, you'd probably be better off using a debt collection lawyer to levy against their assets. Yes I know lawyers cost money but the biggest problem you would have is discovering your debtors' assets. My guess is the sub may not have many, but it's likely the general does -- his trucks and other construction equipment, for example. And don't forget that in addition to garnishing wages and seizing property, you would also be able to attach monetary assets such as bank accounts.

I don't think you can write this loss off on your taxes unless the floor is in a building that you use for business purposes, such as renting it out, for example.


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RE: Best way to recoup loss from contractor?

I'd consult an attorney on this one. You've got a number of issues here, including the apparent refusal of you insurance company to cover the loss. Don't automatically accept their refusal to cover it because you may live in a jurisdiction where courts have held that losses from faulty construction are covered by homeowners liability insurance.

If you do decide to sue your builders and actually get a judgment, you'd probably be better off using a debt collection lawyer to levy against their assets. Yes I know lawyers cost money but the biggest problem you would have is discovering your debtors' assets. My guess is the sub may not have many, but it's likely the general does -- his trucks and other construction equipment, for example. And don't forget that in addition to garnishing wages and seizing property, you would also be able to attach monetary assets such as bank accounts.

I don't think you can write this loss off on your taxes unless the floor is in a building that you use for business purposes, such as renting it out, for example.


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