Originally Posted By: mcraig This post was automatically imported from our archived forum.
I have several friends that have approached me about low priced bonds to meet the AZ state requirements.
I want to help everyone in one shot so here is the answer to the issue in states that don?t require E&O insurance. If you are serious about starting up a HI business you have to do it in a professional way. First off what I tell everyone is to form an LLC (Limited Liability Company) this basically separates your personal property from your business. Then you need to get your Bond, before you get your bond check around for a bond that will not ask for personal property for collateral (such as your house and your Spouse?s information) Your low price bonds ask for you to use your personal property for collateral, If you get one of these you have just defeated your LLC If anyone take legal action against you, you can loose your property and even worse a good lawyer will tie your personal property to your business and you will loose everything you have. If you don?t have a bond that ties your personal property to your business you can?t be personally sued you cant loose anymore than your business assets. Next off put a Lawyer on a retainer to represent you if needed you will find this cost around a forth of what your E&O insurance cost annually. Now here is how it works if some one is mad at you they go out and get a lawyer the lawyer they hire will not take a case that won?t pay them big bucks the first thing a lawyer looks at is if you have E&O insurance if you do he sends out a threatening letter to your E&O (he knows there is a chance of a large settlement with out a fight) then your E&O drops you or raises your rates (you loose know matter what) Now if you don?t have E&O and are a LLC the lawyer checks your bond in AZ it needs to be $25000.00 then he sees your are a LLC and that he won?t gat anymore than your company assets ( another $25000.00?) This is not worth his time to take this case he won?t make big bucks even if he wins. So he tells the Customer to take you to small claims court small claims court has caps on what you can win (Under $5000.00) now to take you to small claims court he has to sue your LLC. Now say you go to court you get to defend your report before a judge not a jury and there are no lawyers in small claims court you have a vary good chance to win (if you are a professional) If you loose there is a strong chance that the judge won?t award them anymore than the cost of the inspection so you pay them back the price of the report and you keep your business and your bond is unaffected and you are done with paying out anymore money to anyone.
Originally Posted By: Nick Gromicko This post was automatically imported from our archived forum.
Michael: What does the bond cost without putting up personal assets? We were working on having our own NACHI bonding for members but dropped it due to lack of interest.
Originally Posted By: dharris This post was automatically imported from our archived forum.
Nick
All of your ideas sound good, and a repeat of many ideas brought up here among local inspectors, But the big question is [and I don’t know the answer] if the customer files a complaint against the inspector at the btr, and the btr finds the inspector did not comply with standards, can the buyer then sue the inspector personally as he did not comply with state requirements??
Originally Posted By: Blaine Wiley This post was automatically imported from our archived forum.
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But the big question is [and I don't know the answer] if the customer files a complaint against the inspector at the btr, and the btr finds the inspector did not comply with standards, can the buyer then sue the inspector personally as he did not comply with state requirements??
Originally Posted By: dharris This post was automatically imported from our archived forum.
bwiley wrote:
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But the big question is [and I don't know the answer] if the customer files a complaint against the inspector at the btr, and the btr finds the inspector did not comply with standards, can the buyer then sue the inspector personally as he did not comply with state requirements??
Of course. That would be called negligence.
If that's the case, there are many new inspectors, [the ones that cannot qualify for E@O due to lack of proper training etc.] opening themselves to personal liability where E@O would cover them regardless, granted there poilcy may be cancelled after the claim
Originally Posted By: mcraig This post was automatically imported from our archived forum.
Dan you should know the answer to that. If you are an LLC you can not be Sued (personaly) even if the BTR finds you neglegent you arean employee of the LLC the LLC will be sued that is listed in your Corperate law books in all states Dan ask your wife about this I am not BSing you guys this is Corperate law there are Federal rules on how you can sue a LLC. and no member of an LLC can be sued individualy unless a link can be made between his personal property and the LLC. This is the greatest thing out there for a small business man to defend himself in this day and age. This is federal rules it holds in all states. check it out. I am not kidding you guys.
Originally Posted By: Blaine Wiley This post was automatically imported from our archived forum.
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For business owners who think they can form a limited liability company and avoid personal liability, a Florida appellate court has a message: THINK AGAIN! Just as an individual corporate officer may be held personally liable for negligence, so may a member of a limited liability company (LLC) be held personally liable for negligence.
In Estate of Canavan v. National Healthcare Corp., 2004 Fla. App. LEXIS 10998 (Fla. 2nd DCA, July 23, 2004, Case No. 2D02-2438), the trial court granted a directed verdict in favor of a member of an LLC that operated a nursing home. The trial court accepted the LLC member?s argument that he could not be held personally liable as a managing member of the LLC, or as an officer of the corporation that was manager of the LLC, without piercing the corporate veil.
The appellate court reversed on the basis that negligence is tortious conduct which is not shielded from personal liability, hence it was not necessary to pierce the corporate veil in order to keep the alleged individual tortfeasor/member in the lawsuit as an individual party defendant. The court cited a 1999 Florida case that held officers of a corporation may be personally liable for their own torts even if their acts are performed as corporate officers. Fla. Specialty, Inc. v. H 2 Ology, Inc., 742 So.2d 523 (Fla. 1st DCA 1999).
In the Canavan case, the plaintiff sued for damages suffered by the decedent while residing in a nursing home operated by 1620 Health Partners, L.C., a Florida limited liability company. The manager of the LLC was a corporation, Southern Hospitality Developers, Inc. An individual named Roger Friedbauer and his wife were members of the LLC. They were also the only ?principals or shareholders?, to use the court?s words, of the LLC and corporation. The corporation had no full-time employees. The plaintiff sued the LLC, the corporation and Roger Friedbauer, personally.
The plaintiff successfully argued that it had presented evidence that Roger Friedbauer was negligent in that he was responsible for approving the nursing home?s budget, that he functioned as the sole member of the governing body of the nursing home, that federal law (42 C.F.R. Sec. 483.75(d) (2002)) makes the governing body legally responsible for establishing and implementing management and operation policies, that he ignored complaints of inadequate staffing while cutting operating expenses, and that the pressure sores, infections, and other medical problems suffered by the decedent were the direct result of understaffing of the nursing home. The appellate court granted the decedent?s estate a new trial against Roger Friedbauer.
This case is a reminder that the limited liability protection offered by an LLC is not absolute. Just as an officer of a corporation may be held liable for his or her own personal negligence while acting in that capacity, a member of an LLC may also be personally liable for his or her own personal negligence or other tortious conduct while acting on behalf of the LLC. To expect otherwise would be asking for a license to be negligent, which at least one Florida court will not grant
Just remember, once case law is established, it will be cited in other states as well. Anyone can be sued by anyone for anything at anytime for everything.
Originally Posted By: mcraig This post was automatically imported from our archived forum.
Blain You need to reread there are several issues at play here.
There is the lisencing athority (BTR in AZ) and then there is the court of law. The BTR can find a HI was neglagent and even fine them or god forbid pull there license. But then you would have to be sued in a court of law. The only way a person can be sued individualy is to have there personal property tied to the LLC if you did the LLC in a propper way they have to sue the LLC not you If you read what I said you have to seperate yourself from your business.
you have to have a legal Corperation with officers and legal representation most people I know do not have a Lawyer on retainer that represents there business this is a key to you being lagitamit. I don’t have one single penny of my business and personal property intwined at all.
My name is trademarked with the state and my LLC is regestered with the BTR too. All my officers are listed in all things that deal with my LLC plus my lawyer.
Anyone wanting to sue me still has to contact my Lawyer and then sue my LLC.
If I am neglegent the BTR can deal a blow to me personaly but I am still an employee of my LLC and can not be sued they have to sue the LLC.
Every case I have ever seen that a person was sued individualy was because they found a link between the LLC and the persons finances this is the only way. Why do you think there are companys in America?
Look at Enron and the big scandles those guys got nailed because money went to there personal accounts. that was the tie used to nail them individualy.
Originally Posted By: mcraig This post was automatically imported from our archived forum.
This is out from the case you posted:
An individual named Roger Friedbauer and his wife were members of the LLC. They were also the only ?principals or shareholders?,
They were the only principal share holders (They were not Lagitamit)
You need employees, a Lawyer, and officers.
this just proved what I was telling you in your own case you listed.   
Originally Posted By: Blaine Wiley This post was automatically imported from our archived forum.
That is the point exactly Michael. All that has to be proven is commingling of funds. Did the defendant ever purchase gas for his personal vehicle on the business credit card or vice versa? Were school supplies ever purchased along with business supplies on a company check? Did you ever deposit a business check or cash paid to you into your personal account? Do you deduct your work shoes and shirts as uniforms on your taxes? Do you have a business only vehicle and business insurance on that vehicle, or do you drive your personal truck which is on your personal insurance policy? Those and many, many more things can be and instance of proof for lack of separation between the LLC and the owner.
I have a Home Inspector license and have rules to follow. Not only can my license be suspended or revoked by the county for a negligent act, but I can be sued personally for negligent acts, and yes, I am an LLC. It matters not what a regulatory board finds. It is possible that you could be found in compliance by the BTR, and still found liable by a judge or jury. Just depends on the case and the lawyers involved.
Originally Posted By: Blaine Wiley This post was automatically imported from our archived forum.
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An individual named Roger Friedbauer and his wife were members of the LLC. They were also the only ?principals or shareholders?
Most LLC's are comprised of the owner, who is also the president, sole share holder and employee. That is exactly the purpose of the LLC, and is legitimate. With an LLC you still file a schedule C, do you not? LLC is considered a partnership in most states and by the feds.
I have been a C Corp, S Corp and LLC (and even a sole proprietor) at various times in my life. You can still be sued personally in all of the above, although possibly more difficult. Most courts will not take your house, however.
Originally Posted By: mcraig This post was automatically imported from our archived forum.
Blain you and I can argue law till the cows come home that is the beauty of law it is up to interpitation and if you have the money to fight your case.
Now I posted this for one reason I was asked by some friends about renewing there bonds the bond company they were using asks for you to list your house and other personal property as colateral.
I am warning people that don't know any better that this links you to your LLC and can leave you open for loosing your personal property.
I am a legal LLC I have a Bookkeeper, Lawyer, 2 corperate officers and employees I also have a EIN with the IRS. I have never spent one penny of my companys money I am a seperate employee I draw pay like everyone else in my LLC. If I am neglagent my LLC will be sued I am an employee.
