Brian Goes To Court, Brings Home The Bacon

In: Education| Real Estate By: Brian Armstrong

13 Aug 2008

Today I got to play lawyer. Some of you may remember this real estate deal which went bad, in part due to my own ignorance and in part due to an unscrupulous contractor.

If it had been an honest mistake with this guy, I’d say it’s water under the bridge. But this particular contractor was just thoroughly unethical and I decided to go after his ass Donald Trump style and make him pay.

Harvey DentI always wanted to try being a lawyer. Mostly just because you get to wear $2,000 suits, act like a bad-ass, and take down mob bosses (of course when I found out this didn’t happen in real life, I quickly moved on to secret agent as my next profession of choice). It was finally my day in court. I put on my best suit (more like $200, but still) and woke up at the ungodly hour of 8:45AM to head to court. At first I thought he wouldn’t even show, but he did and the anticipation was heavy in the air as I furrowed my brow and starred him down (I was watching some discovery channel recently, and this alpha male sure as hell wasn’t going to break eye contact first).

I recognized the feeling coming over me. It was the same feeling I get before doing public speaking, acting, or that one time I tried stand up comedy (no one laughed). It’s nervous energy but it’s also a rush. One of my life philosophies is that you should continually try doing things that sound a little scary to expand your comfort zone. This is how you build confidence. Try to have that scary – pit in the bottom of your stomach – feeling at least once a week if you can. I had never gotten to prosecute a crook in court so I figured even if I lost it would still be worthwhile as an educational exercise.

I had practiced my opening arguments and was all set to launch into a dazzling diatribe complete with photos and earth shattering proof the likes of which Jack McCoy has never seen. I could even picture the standing ovation from the rag-tag audience that populates a small claims court house and the press waiting outside to snap my photo as the defendant was escorted in silver bracelets. Unfortunately, my daydreaming was cut short as the judge called us up and announced he was sending us to mediation.

Mediation is apparently standard practice in small claims court where they sit you in a room with a neutral third party and see if you can work it out. I still got to do my diatribe though.

It started out predictable, I laid out the facts of my case clearly and simply. I had also sued him for an absurdly large figure in the hopes this would be a starting point for negotiations (which it was). It was then his chance to respond, and boy was he a weasel. I got the feeling this man had been practicing the art of bullshitting since he was in the womb. I couldn’t tell if he really believed some of the stuff he saying (delusional) or if he was was just good at faking it. Probably a bit of both.

He had perfected the art of saying a bunch of totally unrelated things in rapid succession during an argument to the point where you forget what the main point was (a tactic I first saw employed successfully by my old college roommate when picking up women).

It would have been a pretty open and shut case in my favor, except he did pull one pretty neat trick. It turns out when he bid the job, his first bid included an itemized list of stuff to be completed and a bid for labor only. I didn’t want that so he submitted a second bid later for labor and materials which is the one we actually signed. Problem is, the second bid referenced the list of items in the first bid and didn’t duplicate it in one complete contract.

Therefore, we were left with a somewhat unfortunate situation where the contract and the list of items document had a contradiction. One said he was bidding for labor only, and the other said he was bidding for labor and materials both.

The one with the signatures on it stated what we actually agreed (labor and materials) but he stapled the original list of items to the back of the contract so it looked like all one document. Bad weasel!

Sure, it had no initials on it or anything (a thinly veiled ploy of a desperate man), but I still needed the list of items document to show what he had not completed so I couldn’t discount it completely. At the very least, the judge would have had to admit there was some contradiction between the two pieces of paper and this opened up a window (however slight) of doubt.

I have to say, the 150 year old man who was mediating was very impressive. We verbally sparred and battled on, both concluding the man across from us was a complete idiot, and eventually gave up communicating and decided to go before the judge. But the mediator wasn’t done yet. He asked to speak to each of us individually.

After lecturing me on how to get a better contract next time when dealing with the criminal under-world of contractors, he looked me straight in the eye and said: “Brian, what will make you happy?”

That was a good question I had to think about. Money? Yes. Punishing evil? Yes. Getting him to admit he was wrong? I’d given up on that…you can’t change people who are a detriment to society unless they want to change themselves. He wasn’t ready for that yet. Still needed a few more lawsuits against him. I eventually came up with a figure that would make him think twice before screwing over other citizens, and it was his turn with the mediator.

Anyway…long story short, I eventually walked outta there with $2 grand. I would have been a lot happier with $5 or $6, but oh well. As they say, a negotiation isn’t successful unless both people leave feeling like they gave something up. And hopefully he’ll at least think twice before taking advantage of someone next time.

Chalk one up for the good guys.

Lessons learned:

  • Do scary things in life, they help you grow.
  • Lawsuits are emotionally draining and bring a lot of negative energy into your life. Next time I would love to be able to afford some swanky (real) lawyer to take care of it for me. This way I’d still be able to punish crooks without it taking up my personal time or energy (I have far more fun things to be doing).
  • Next time I’ll work harder on getting an unambiguous contract. It’s worth a few awkward moments and being stickler up front for paperwork to save this headache down the road. Itemize every item that needs to be done and have them initial each NUMBERED page so there are no “paper-rearranging-stapler-weasel” tricks.
  • My biggest lesson (which seems obvious and everyone told me but I still didn’t do): DO NOT pay a contractor a dime until the work is done, period. Don’t ever give them money for materials up front, even if they say they can’t afford it. Inspect the hell out of their work before paying, and don’t ever let a contractor talk you into giving them money up front. Walk away from the deal if you have to. The day you write the last check is the last day you will ever see them (unless you are in court).

At the end of the day I have to remind myself that this was an incredibly valuable (and inexpensive) lesson to learn so early in life. Many people don’t get taken advantage of so early in their business careers, and I’m almost glad it happened now instead of when there was a really big deal on the table. You just can’t learn this stuff in business school. Thank you, Mr. Weasel contractor, for teaching me about the world.

Until next time, keep breaking free!
Brian

This post is part of a series on Bad Real Estate Deal

Table of Contents:

  1. How A Good Real Estate Deal Turns Into A Bad One
  2. Brian Goes To Court, Brings Home The Bacon

10 Responses

    Avatar

    Adam Teece

    August 14th, 2008 at 6:19 pm

    Great job on winning the case. You looked at it exactly how I am having to look at things as they come up. Real Estate Investing is not an easy business and mistakes can be quite costly.

    I am business partners with my Dad and his first investment was through a crooked guy who was supposedly and expert and it ended up costing him $50K and a trip to court. Now the court day was very educational and the judge was initially ready to tear my dad the “evil investor” apart. But he laid things out logically and explained everything that happened and he got judgments for all the money owed. The problem is, with the people involved being as dead-beat as they are, we will probably never be able collect the money. We could if we went after it and spent a lot more to get wages garnished and such, but spending good money after bad just isn’t worth it.

    We have made so many mistakes in our real estate investing business that it finally doesn’t bother us that much anymore. We are looking at it like the Thomas Edison way to success.

      Avatar

      Brian Armstrong

      August 14th, 2008 at 6:57 pm

      Great stuff Adam. I think the mistakes are worth it, even if they cost money they give you such an education, it’s hard to put a price on that. Each mistake has the potential to earn you much more in future business deals.

    Avatar

    Eric

    August 15th, 2008 at 1:10 pm

    Hi,

    I just found your site and read this post. It hits home with me. I hired a contractor last year off a recommendation and it was a total nightmare. After beginning work he turned into a Bad weasel just like you mentioned. Hopefully all contractors aren’t like this but I have a bad taste in my mouth for all of them now.

    Next I will be triple checking everything on the contract.

      Avatar

      Brian Armstrong

      August 15th, 2008 at 4:12 pm

      Hi Eric, yup, its amazing how common this story is. There isn’t any other industry I’ve encountered that is so full of corruption.

    Avatar

    seotips

    August 15th, 2008 at 11:27 pm

    well, i’ve never dream become a lawyer, but with this story, maybe i could considering my decision :)

    Avatar

    Elizabeth Potts Weinstein

    August 16th, 2008 at 10:54 am

    Congrats that mediation worked pretty well for you — as an attorney (and former litigator) no one ever gets what they really want (which usually is “teaching someone a lesson” — even the Fortune 500 companies try to do that).

    I make it a practice to NEVER hire a contractor who does not have the money to purchase materials. If he runs his business such that he has no short-term line of credit, then he is too murky to rip up my bathroom.

    I also typically accept the contractor with the highest, or second-highest bid. I want a contractor who is interested in competing based on quality, not lowest price. :) Has saved me money multiple times, because they don’t go over bid. Course it also may help that I always make sure to reference the fact that my husband and I are both attorneys. :)

    ~ Elizabeth

    Avatar

    Freddie

    August 19th, 2008 at 8:11 am

    Brian,

    Congrats on your day in court. These contractors can be a mess to deal with, but it sounds like you really learned your lesson.

    Never pay a contractor up front for anything. This is so true, but here is what most people don’t know.

    Good, honest, ethical, hardworking contractors don’t require a down payment. They understand that they have to invest themselves into the project as well. This way everyone has a real interest in getting the project done in a timely manner.

    One more thing to add to your contract, payout phases. Use phases to determine when the contractor is going to get paid.

    Say you are going to rehab a home. Break it down into four parts and let the contractor know that they will get paid X amount of dollars when each phase is completed.

    As you said, thoroughly inspect the property before cutting a check for payment. Make sure every alteration is completed to your satisfaction before the payment is made. After you make payment, you give up all your leverage and you end of hoping people have high business morals.

    I say your business is far too important to run it that way. Besides, you don’t want to build bad habits because you want to come across as a nice person. You can be nice, but save that until the business is done.

    You don’t have to be a prick, but be professional. Get the work done, have a beer, and then focus on being a good guy.

    Lesson learned, Brian is the man. He brought home the bacon!

      Avatar

      Brian Armstrong

      August 19th, 2008 at 5:54 pm

      Sounds like you are speaking from experience Freddy! :)

        Avatar

        Freddie

        August 19th, 2008 at 9:27 pm

        Yeah Brian, I have some first hand experience. I aalso own a real estate appraisal company and we focus on doing After Rehab appraisals where I have to inspect the property have each phase is complete. There are shome realy shady people in the real estate business, but there are also some good people. You just have to find them. Like most businesses, it comes down to people.

        Keep up the great work, Brian!

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Breaking Free is a blog for people who'd like to quit their 9-to-5, start their own business, and achieve financial freedom. It's written by web-entrepreneur Brian Armstrong. You can read more here »

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