Monday, April 19, 2021

How a Builder Responds to Being Sued by Their Customer Could Save Money.

For any new home builder, being threatened with a lawsuit by one of your current or past customers can shake you to your core.

As a modular home builder who can literally work with a customer from the first meeting to years after the customer has moved into their home when you are threatened with a lawsuit, that threat needs to be evaluated closely before any actions are taken. This is not the time for any knee-jerk reaction that could hurt you later.

The first thing you have to know is the majority of lawsuit threats are not carried out, as most people are too lazy to actually file a lawsuit after their initial anger passes. However, from time to time, the real threat of litigation might actually be serious.

Fortunately for modular home builders, warranty programs can be purchased that cover nearly every kind of legal liability your business might face.

Distinguishing Anger Rants from Serious Legal Problems

While most potential legal threats are easy to identify as spur-of-the-moment threats during a rant, sometimes serious litigation threats are made that make them difficult to evaluate. A customer threatening to sue because you forgot to put up a ship loose cabinet in their laundry room is clearly an empty threat.

However, a customer threatening to sue because you haven’t fixed a leaking roof during the first year is really something to take seriously. Especially if you’ve tried to fix it and nothing has worked.

One thing is clear. You, as their builder, need to sit down and listen to what they say. Allowing a customer to feel heard may be all that is necessary to avoid a scene or disruption to business operations. Take lots of notes and depending on how serious their problem is, ask for a short period of time to come up with a remedy or fix. Then stick to that timetable and report back to them what your plan of action will be.

Settle Quickly and Quietly is Always Good Advice

If the customer threatening to sue has a legitimate claim, it may be best to settle the claim quickly and quietly. A claimant may be willing to settle their claim for much less than the claim is worth before they have spoken to a lawyer.

However, utilizing an attorney can help you know whether it is a good idea to settle. An attorney will also be helpful when it comes time to negotiate and formalize the settlement.

Laws vary from state to state and making sure that your settlement agreement is enforceable and actually fully settles the matter can sometimes require magic legal language. Also, your attorney can advise you regarding whether you need to report the claim to your insurance company, or whether your insurance company can actually cover the costs of the settlement.

The Two Sides of a Ranting Customer

When a customer is raving mad and ranting with empty threats about things that always happen when someone builds a new home, remember this, they almost always only have two options when they threaten you…. They either are “On” or “Off”.

Let them rant and then ask them to leave your office. Ranting is their “On” switch and after a while, the “Off” switch automatically kicks in. That’s the way most bullies and nut cases operate.

If a bogus lawsuit is filed, hire a lawyer as soon as you are actually served with the legal documents. The courts are used to dealing with frivolous lawsuits. There are procedures available that can get bogus cases dismissed quickly. However, there are strict deadlines. So even if you know the lawsuit is a sham, retaining a lawyer as soon as possible will help to keep the costs low.

And if you are sued over a bogus claim, go on the offensive. Tell everybody about it in every way you legally can. Write on social media, tell all your other customers what this nut is doing and how it might delay their new home, comments to vendors and other businesses are all fair game. Just make sure you don’t slander them. The truth always shines through.

Remember, your business is your baby and nobody messes with a Mother Bear protecting her cub.

Disclaimer: I am not a lawyer and this should not be considered legal advice. It is simply some common sense options you should know.

Gary Fleisher is the Managing Director and contributor to the Modcoach Network and its affiliated blogs. 

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1 comment:

  1. Great point on defect repairs. Even builders with an excellent history of warranty claims, including structural-defect issues can find themselves dealing with a warranty issue years after closing. State statues vary from 4 years to 12 years for builders across the country. Implied warranty is subject to vague and unpredictable interpretations that can vary from one court decision to another. Including an expressed written limited warranty set a buyer’s expectations and limit the builders liability.