Posted by Eric (NH) on January 16, 1999 at 11:51:43:
Mike,
As to your first question, you may need at some point (if necessary) to speak to an attorney about whether this man might technically be considered your employee, if you were paying him to live there and watch the property. If that was the case, you probably should have had a worker’s comp. policy. But again, let’s not put the cart in front of the horse.
As to your second question, I would assume that your liability coverage is what is called an “occurance based” policy, which means that you only needed to heve the policy in force when the incident occured in order to be covered. However, you should check with your agent or written binder to confirm this.
I was hoping someone could give me some advice on a potential problem I’m facing. A few months ago I bought a rehab property from a woman. She owned the bldg. but her two brothers and a sister lived with her. Before closing I arranged for the brother to stay in the property rent free in exchange for watching the place during rehab and make sure it was secure. I’ve had no problems until yesterday. My contractor told me that the brother had fallen in the bldg. and apparently went to the hospital. This morning my contractor saw him walking down the street with a neckbrace on.
Naturally, my fear is that he’s going to sue me for some form of negligence. I’m worried because I’ve violated Bill Bronchicks rule of getting the property out of my name. I currently own this one and one other property besides my own home, all of which are in my name.
I do have $300,000 of liability coverage, but am afraid that won’t be enough if a judgment is ordered. I know I’m jumping the gun since a lawsuit hasn’t even been filed yet, but I’m trying to prepare now. Can anyone offer some advice as to how I can protect myself at this stage of the game.
Another form of asset protection is, don’t leave any equity lying around any other properties you may own. This means possibly establishing a separate entity from the entity holding title to the other assets and making that entity a trust deed holder. Zap all the equity with 2nds, 3rds, or whatever. (Performance mortgages? Not sure, seek professional advice.) Then if a judgement were to somehow wind up on those properties, there would be no equity left to collect. It also would influence an attorney’s client’s consideration of suing, as I believe a judgement is considered income from the day it’s awarded, so the claimant ends up owing the IRS on something you haven’t collected.
When a judgement is awarded and then recorded, it attaches to EVERY property that individual owns in that county and must be paid prior to selling.
These are advanced strategies that an attorney specializing in asset protection will be familiar with…and you definitely need to see one.
Re: HELP! I may be getting sued. - Posted by Eric (NH)
Posted by Eric (NH) on January 15, 1999 at 22:26:19:
Mike,
The most important thing now is to stay calm! At this time, you don’t know exactly what, if anything happened on your property. In addition, you don’t know anything about his injuries.
While 300K is a bit on the skinny side for liability (I carry $1,000,000), the overwhelming majority of non-fatal personal injury cases settle for much less than 300k; and this may well be a simple slip-and-fall, unless he fell through a floor. I am a psychologist who treats chronic pain, and I can’t remember any person I’ve treated being awarded anywhere near 300k.
Again, stay calm. This is why you carry insurance.
Good advice. Don’t fall for the popular myth that just because someone falls on your property, they can sue you. Yes, they can sue, but in over 60% of those cases they will lose. Why? Because they have to prove that you were negligent somehow in creating the condition that caused them to fall, or failed to fix something that you knew was wrong. AND most importantly, that they did know about, or couldn’t have discovered the condition that caused them to fall. For all he knows, the tenant might have tripped over the pattern in the carpet.
He should also contact his insurance agent and tell him about the situation. There might be premises medical payment coverage which will pay his medical bills, regardless of fault.
I’ve never been sued before, so the mere thought of me being sued for something that I really had nothing to do with really burns me up.
Two more questions though. As I mentioned, this person is not a true tenant because we have no lease agreement. When I bought the place, I wrote a little contract stating that he would stay and watch the premises during the remodeling of the house. For this I would pay him a small fee. Do I have anything to be concerned about with this type of arrangement?
Also, I have a buyer lined up for this property once the work is totally finished. My contractor should be 100% done next week. Assuming a lawsuit does come about, am I stuck with holding the property until the case is complete? I’m assuming that the only way insurance will protect me is if I still own the property and am paying premiums.
The main thing to do before selling the building is notify your insurance carrier of the possibility of a claim so they can do whatever investigation they feel is necessary while you still control it. A lawsuit doesn’t have to be filed until the day that your state’s tort statute of limitations expires. Be sure to tell them the exact nature of the business relationship so they can determine what his legal status is, i.e. a tenant, employee, independant contractor.
You don’t have to postpone closing, or anything like that.