The Un-negotiable Letter

December 19, 2005 · Print This Article

Bob Kille Acuspect Home InspectionThis is the next installment of the “Least Restrictive” article in which a fellow home inspector was heading for court over the word “few”.

It’s Friday evening about dinner time when the phone rings and a message is left. Dear home inspector, I just wanted you to know that I’ve sent out a letter detailing my demands for payment in the amount of $5,400 for the damaged adobe bricks on the yard wall.

This is a non-negotiable amount as it is considerably less than the $8,700 estimate in my possession for the total work needed. If agreement on this matter is not satisfied by next week the matter will be taken up in civil court, not in mediation, as you seem inclined to believe by virtue of your contract.

Well, have a nice weekend.

Yeah, right. I think that any communication back to him should be in the same manner, at his home phone Friday evening so he can mull it over the weekend.

If you haven’t read the previous post, the client in question is a shyster-lawyer. My theory about how all this is going to go down is one step closer to happening. The Theory? That the lawyer wants our good man to submit the claim to insurance so he can collect an easy $5,000 by merely writing a letter.

Most attorney’s know that insurance will settle almost immediately for sums of $5,000 and less because to get any type of defense set up and ready will cost at least that with no confidence in the outcome.

So what’s my advice to our hero?

Our home inspector has a lot going for him and I’ll just list the positives; mediation – arbitration in the contract payable by party taking action, fence is outside the scope of a home inspection – commented on as part of the pool barrier and listed in satisfactory condition for it’s age, inspection report recommends further review by expert on the effected “few” bricks. Total of 200 bricks with minor deterioration at the face per experts report.

Now the negatives; client claims that an adobe wall partitioning his property line is not a fence but a barrier and that it is in the scope of a home inspection, client claims that he relied on the word “few” to mean 3 bricks thereby negating the need for further review, client maintains that the condition or absence of the clear sealer for the adobe brick was not reported on and that its absence would have been germane to the sale price, client claims about 275 badly deteriorated bricks per expert.

So here’s the scoop as I see it.

Lay out the case in terms of money and lost opportunity costs and offer something reasonable as relates to his bottom line to make it go away.

Our lawyer wants to go to civil court – 1/2 day at $250 per hour = $1,000
Court remands the case back to mediation as per contract, lawyer pays the $500 mediation fee, losses 1/2 day at $250 per = $1,000

Mediation unsuccessful as lawyer wants the un-negotiable sum – case moves to arbitration per contract, lawyer pays the $500 arbitration fee, losses 1/2 day @ xx = $1,000

I happen to be a certified AAA mediator and I can tell you that neither party will get what they want in mediation or arbitration. So worst case for our home inspector is 225 blocks @ 12 bucks each = $2,700 + $600 for sealer = $3,300

At this point our hero and our lawyer have about 2 days into this if you count the prep work. So our lawyer is out the court and mediation costs, plus the time off @ $250 per hour. That adds up to, lets see…. $5,000 and change.

H’mm, doesn’t sound so appealing now does it?

Our home inspector also has some lost opportunity cost which add up to about $1,200 for the two days and possibly some legal advice amounting to $500 bucks, figure two grand. And don’t forget the possible worst outcome of $3,300 for a total of about $5,000 and change.

Arbitration is binding, but if the worst case happens to our lawyer and he gets a pittance he may take you go to civil court anyway to throw out the binding settlement agreement, 1/2 day @ = $1,000 If there’s a reasonable settlement @ about $1,500 – $2,000 your both still out your opportunity costs. Which in his case out weigh the settlement for a loss and that’s why he won’t take this the distance.

As you can see the math just doesn’t work for the lawyer unless there’s an easy settlement.

My advice was to put this all down is a similar fashion but without the specifics or admittances and offer up a one time offer of $1,500 to let him save face and get this nusiance over with. A little laungage about seeing it through to the end if the offer is declined wouldn’t hurt.

It will be worth watching just to see if my theory is correct. I’ll post more news as I get it.

Copyright © 2005 by Bob Kille. To read other home inspection related articles or to view home inspection software and book publications by Mr. Kille, click on this link.


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