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Small Claims
Posted by Joe the Surveyor on November 15, 2010 at 9:27 pmWorks very well!!:-) 🙂
Joe the Surveyor replied 13 years, 6 months ago 6 Members · 11 Replies- 11 Replies
Please tell. Dispute or basic deadbeat? Did you get paid or do you only have the judgment at this point?
I’ve had mixed results from 3 small claims cases in 17 years. The first one went to court, I got a default judgment, threatened to garnishee the defendant’s wife’s wages, and got paid in full. The second one settled in full prior to trial. The third one resulted in a default judgment against a judgment-proof defendant, and I’m still holding the bag 3 years later.
> The third one resulted in a default judgment against a judgment-proof defendant, and I’m still holding the bag 3 years later.
Jim I am curious what you mean by “judgment proof”. I believe you posted something about this recently, but I cannot recall the specifics.
I am going to go after a client who I have a feeling will now show up either, and I will get a default judgment. I assume with this judgment you can use it to garnish, but you then need to return to court? I am not familiar with the process once you get the judgment.
> Jim I am curious what you mean by “judgment proof”. I believe you posted something about this recently, but I cannot recall the specifics.
In my case, the contract was signed by an individual, with no mention of the LLC that owned the property (a hotel and restaurant complex) that was the subject of my survey (an ALTA). This is my fault; I neglected to take the time to verify ownership and incorporate the formal title holder into the contract. Even though the individual is a principal of the LLC title holder and the registered agent for service of process for the LLC, the judge wouldn’t award the judgment against the LLC, only against the individual.
The individual owns nothing in his own name — no house, no car, nada. The bill collector I engaged to try to collect the judgment said that the guy saw me coming and never intended to pay, having carefully structured his assets so that none of them show up in his name.
It was an expensive lesson to learn. I hope others will be able to learn it from my experience instead of their own.
It is also next to impossible to get money from those on some sort of public assistance. Try to get the folks down at the disability office to send you money that would normally go to the deadbeat client. Professional deadbeats open and close bank accounts like most people change their socks. Certain garnishments take priority, such as child support payments, relegating your request to maybe get something if the total dollars taken out of a paycheck by the priority garnishments do not exceed the legal limit on the percent of the paycheck that can be hit by garnishments. Small claims is against the person, not their property. You have to transfer your claim to the next higher category of suit to file against the property in my state.
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> It was an expensive lesson to learn. I hope others will be able to learn it from my experience instead of their own.In hindsight, how would you proceed? Do you quiz the person on who is the vested owner of the property, and request their signature instead of the contact? I do not know if all clients have actual interest in the properties we survey for an ALTA.
> In hindsight, how would you proceed? Do you quiz the person on who is the vested owner of the property, and request their signature instead of the contact? I do not know if all clients have actual interest in the properties we survey for an ALTA.
Great question. Determining ownership should be easy, since the title report will disclose that. In my example, the owner (the LLC) was the client, so if I’d named the LLC on the contract I could have filed a lien against the property once I’d obtained the judgment. I was in too much of a hurry to wait for the title report, and wrote my contract based on my knowledge of the property. I’d done an ALTA on it about 13 years prior, and not much had changed.
It might take a long time to collect on the judgment, but since judgments gather interest at 10% in California, it’s not a bad investment. If there isn’t a sale or refi as the 10-year collection limit approaches, I guess you’d have to try to force payment by other legal means.
I’m less certain about the best way to handle a non-owner client. Maybe others with more experience can address that.
> I could have filed a lien against the property once I’d obtained the judgment.
Thanks Jim. On the matter of the lien (since I expect to go the route of default judgment and seek ways of payment), don’t you have to have the clients sign some notice of lien during the time of contract so that you are legally able to lien in the first place? In other words, can you simply get a judgment, walk down to the recorder, and record a lien?
I am thinking in terms of how contractors do this. I thought that they were unable to do this unless they followed proper protocol, so even if they record a lien it can be tossed out.
After getting your default judgement you have to wait thirty(?) days and then you can file an Abstract of Judgement, usually at the same place you file the Small Claims forms. It’s good againist ALL property in the county concerning the judgement creditor.
The AoJ is good for nine years, at which time you can renew it for a small fee.
I had one go almost to the limit and when I was just about to renew the client’s lawyer called and asked what it take to clear the lien because he wanted to refinance his home loan. The $270 he owed me (an engineer who I wasn’t about to let off the hook) came to $1200 after all new fees and interest were added.
> After getting your default judgement you have to wait thirty(?) days and then you can file an Abstract of Judgement, usually at the same place you file the Small Claims forms. It’s good againist ALL property in the county concerning the judgement creditor.
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> The AoJ is good for nine years, at which time you can renew it for a small fee.
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> I had one go almost to the limit and when I was just about to renew the client’s lawyer called and asked what it take to clear the lien because he wanted to refinance his home loan. The $270 he owed me (an engineer who I wasn’t about to let off the hook) came to $1200 after all new fees and interest were added.Thanks Dave. Good to know.
My case went like this.
I had a guy during the crazy year of 2007, who owned a HVAC company and thought he’d get into to real estate, well he looked a small piece (5000 sq. ft) and thought he buy it to flip…
Well, I did all the work, but he never closed on the propertyt…and I never got a retainer!!!! Normally I require 50% down, but for some reason, it didn’t happen. I did however have a contract signed by him.
After many calls to him, his broken promises to me to pay. I’d had enough.
I filled in small claims (which was really easy to do) for $75 fee and in a short time I got paid in full! $(1200)I kick myself for not getting the retainer, which would have at least have helped. The real problem was he didn’t close so he never needed to pick up the map.
The other posts about people being judgement proof are both disheartning and eye opening at the same time…walk softly but carry a big stick.
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