Options for non-paying client?

[Randall Clark]

Did an inspection months ago and client was to pay at closing. Long story but their realtor offered to pay me 1/3rd the fee over a three month period. I told her I would not accept her money since it is not her debt.

Options are taking them to small claims or hiring a debt collector. Pros and cons of each. Court = about 4 hours of my time and debt collector takes little time but no guarantee of payment.

Thoughts?

[Dom D'Agostino]

Chalk it up as a learning experience.
Either option will likely cost you more time and money. Send a collection letter yourself (Word has some generic samples), and just move on.

Instead, look for ways to avoid this issue in the future.

Dom.

[Steven Turetsky]

I am not allowed to release any reports until full payment has been received.

[Ted Menelly]

Did an inspection months ago and client was to pay at closing. Long story but their Realtor offered to pay me 1/3rd the fee over a three month period. I told her I would not accept her money since it is not her debt.

Options are taking them to small claims or hiring a debt collector. Pros and cons of each. Court = about 4 hours of my time and debt collector takes little time but no guarantee of payment.

Thoughts?

Toni or Vini always do a good job for me;) Just a little ethical persuasion.

A mechanics lien on the property is only dollars. That will land on the credit report in time as well.

The Realtor should never hand you a dime. A little ethics involved there as well.

[Steven Turetsky]

Toni or Vini always do a good job for me;) Just a little ethical persuasion.

A mechanics lien on the property is only dollars. That will land on the credit report in time as well.

The Realtor should never hand you a dime. A little ethics involved there as well.

How can you lien the property if you are not contracted by the owners of the property?

As was mentioned above, take it as on the job training, and don't put yourself in that position again. Get paid before you release the report. PERIOD.

[Benjamin Thompson]

If you go the small claims route and you are an LLC, be sure to file in the name of the LLC. I made that mistake and it was thrown out..

[Markus Keller]

Take it as a lesson and move on. The idea of getting paid at closing has been discussed here many times. Those of us who know (or are jaded) won't do it. Also you may want to consider the idea that if the client can't afford to pay you at the inspection, they might not have any money anyway.

[Nick Ostrowski]

On a few rare occasions, the realtor has paid me. It doesn't have any impact on my ethics or the way I do my job. I don't care where the money comes from. As long as I get paid.

Showing up at the person's work and making a stink would be a good way to get paid.

[Randall Clark]

Take it as a lesson and move on. The idea of getting paid at closing has been discussed here many times. Those of us who know (or are jaded) won't do it. Also you may want to consider the idea that if the client can't afford to pay you at the inspection, they might not have any money anyway.

Problem here is that delayed payment is very common and I have said no several times lately and have lost a few jobs since I would not do it. Most of the time, pay at closing works fine.

I guess I could attempt to charge a fee for delayed payment and over time, if I did not get paid once, the extra fee from the others would cover it.

Another thought would be to mandate a credit card # (tried in past and they said no and went elsewhere) or have client write a post-dated check that I would return if I got paid at closing.

[Nick Ostrowski]

I would never agree to accept payment at closing. They want they inspection report the same day or the next day. I want to be paid the same way.

[Bruce Ramsey]

Problem here is that delayed payment is very common and I have said no several times lately and have lost a few jobs since I would not do it. Most of the time, pay at closing works fine.

I guess I could attempt to charge a fee for delayed payment and over time, if I did not get paid once, the extra fee from the others would cover it.

Another thought would be to mandate a credit card # (tried in past and they said no and went elsewhere) or have client write a post-dated check that I would return if I got paid at closing.

Delayed payment is only common when you allow it. I have been inspecting in Raleigh for 6 years and never have delayed until closing. Part of my Q&A with potential clients is to state that payment is due at the time of the inspection in cash or check. A few have been out of town during the inspection and either leave a check with their agent or mail me a check. Only had 2 or 3 whine about payment and choose another HI. Better that some other inspector has to deal with the delayed payment.

For those who argue that their closing costs are being paid by the seller and this is part of closing costs, I offer them a printed receipt to submit at closing for reimbursement.

Got stiffed on my second inspection. Client did not attend inspection, Agent signed contract. Never got paid. Never again.

[Ted Menelly]

How can you lien the property if you are not contracted by the owners of the property?

As was mentioned above, take it as on the job training, and don't put yourself in that position again. Get paid before you release the report. PERIOD.

I agree totally with the get paid at the inspection period. I do not do any delayed paying. As Bruce said it is only common if you accept it. If you tell them as Bruce said about the receipt they will still get paid at closing. Them, not you. As far as someone not being able to pay for an inspection on a home that they are paying a 100,000 or 200,000 or even 50,000 then they should not be buying a home because they cannot afford it. That is how we got into such a big mess. Folks so tight their wallet squeaked being pulled from their pocket. Get sick for a couple weeks and they start paying catch up and it snowballs from there. If there car breaks down and it gets repaired they hand the repair man the check or cash or credit card before they get the keys handed to them.

As far as lien on a home . I have seen it happen. The court accepts it because it was work on a home they bought and you worked on that home for them, that they bought. They created a debt before the home. They already have earnest money down and a contract to purchase signed. Like I said I saw it happen in the past years ago so I would guess it will still work.

As far as taking money from a Realtor I will only do that if the client already paid them as in out of state folks. Then they are literally not paying me, the client paid me thru them.

[Jerry Peck]

If you know where the thief lives (they did steal your services) hire a homeless person and have them stand out front of their house wearing a sandwich board sign stating how much he owes you and what it is for, You should be able to keep a homeless person in soup and coffee for a reasonable amount for quite some time. :)

[Tim Spargo]

Jerry makes a good point, I wonder what the statute for theft of services is in your area... Some services like ours *may* be covered there.

Or, many dump truck companies are always looking for a place to dump clean fill dirt.... so I'm told.

[Vern Heiler]

Problem here is that delayed payment is very common and I have said no several times lately and have lost a few jobs since I would not do it. Most of the time, pay at closing works fine.

I guess I could attempt to charge a fee for delayed payment and over time, if I did not get paid once, the extra fee from the others would cover it.

Another thought would be to mandate a credit card # (tried in past and they said no and went elsewhere) or have client write a post-dated check that I would return if I got paid at closing.

Giving someone a credit card no. that is maxed out is not a crime (and believe me that is what you get). Giving someone a bad check has more dire consequences! By the way post dating a check means nothing, the bank will process it no matter what date is on it.

[Rick Hurst]

Holding a sign out front of their home as Jerry works really well as I have done this before. I had their name on the sign explaining they don't pay their bills for services rendered.

You cannot stand on their actual property but you can stand on the sidewalk or parkway next to the street.

I had the client pay me in about an hour after we showed up and we were on our way.

If you have no luck, you might turn off the water to their home and fill the meter box with some cement and dump a five-gallon water bottle onto it.

I also like the idea of having some dirt placed on their driveway or property.

Worse than all that. Give their kids an expresso and a free kitten.

rick

[Randall Clark]

Holding a sign out front of their home as Jerry works really well as I have done this before. I had their name on the sign explaining they don't pay their bills for services rendered.

You cannot stand on their actual property but you can stand on the sidewalk or parkway next to the street.

I had the client pay me in about an hour after we showed up and we were on our way.

If you have no luck, you might turn off the water to their home and fill the meter box with some cement and dump a five-gallon water bottle onto it.

I also like the idea of having some dirt placed on their driveway or property.

Worse than all that. Give their kids an expresso and a free kitten.

rick

Great ideas esp the meter box. I'll try the doorbell first and pull out the sign if that does not work.

[Nick Ostrowski]

Rick, I've always fancied the idea of a 60 lb. bag of quikrete poured down an exterior main sewer cleanout followed by just enough water to make it set it up real nice.

[Rick Hurst]

Why carry that heavy bag Nick? A small sack of potato's works really nice too.

[Nick Ostrowski]

But an electric auger snake will break potatoes up too easily.

[Jerry Peck]

Holding a sign out front of their home as Jerry works really well as I have done this before. I had their name on the sign explaining they don't pay their bills for services rendered.

You cannot stand on their actual property but you can stand on the sidewalk or parkway next to the street.

I had the client pay me in about an hour after we showed up and we were on our way.


Rick,

You are where I got that from, I remember you posting that, and that it worked pretty quickly too. :cool:

Got to be carefully about the dirt, you might end up having to pay to have it removed, but I like that idea (except ... why waste 'clean' fill there, compost, cow manure, something more appropriate to their crappy actions ... ;) ).

[Matt Fellman]

Over the years I've had about a 90% success rate with a certified demand letter threatening small claims court. Usually, in order for it to work right (if they actually show up) you have to officially make them aware of the debt (certified mailing) and explain that you will also seek filing fees and other collections costs. You'd likely get them anyway but putting it into the demand letter seals the deal.

I've attached my template... anyone is free to use it.

I've never had anyone respond to show up.... afterall, why would they? You have a signed contract and no payment. I can't imagine a defense.

I've followed through and filed judgements on 3 people which are still outstanding (and gaining interest). If/when they ever want to buy anything big again they should have to contact me and clear it up. I suppose they can claim bankruptcy and I'm screwed.

Overall, the letter works most of the time.

Edit: I guess I can't upload an MS Word Doc..... anyone feel free to PM or email me and I'll send it over.

[John Kogel]

Matt, do you have to pay for filing in small claims court? In Canada, I would have to pay $50.

[Matt Fellman]

Yeah, the whole thing is about $150 if I remember right. Part of that is filing and some is to have the person served and the case filed. I could do some of it myself and save a few bucks but I guess I'm just lazy :)

Once served, the respondent can either pay or request a trial which costs them about the same as my filing fee. Since either one costs them money they usually do nothing.

[Dana Bostick]

For the few times I've had the client "forget" their checkbook or their wallet with credit cards, I've had no problem getting the agent to pay. Simply stating that there will be NO report or verbal prior to payment usually loosens up the purse strings. Amazing how well that works.:rolleyes: Pay is pay, I don't see the ethical issue with the agent paying.

[Jack Feldmann]

I didn't see in the first post if you have actually talked to your client about the money owed. That should be the first thing.

If you submitted a bill to the closing company (Title Company, Real Estate Atty, etc, and were not paid, then you have an issue with THEM. If you didn't submit a bill to whoever was handling the closing, then you have to address it will your client.

Obviously this is a lesson learned about taking payment at closing. When asked, we just tell them that many times our clients do not buy the home after we inspect it. We still need to get paid. We "MIGHT" consider delayed payment, if they give us a credit card number, with the understanding that we will charge it if we don't get a check after closing. We have found that after explaining it that way, they somehow find a way to pay us at the inspection.

I've agreed to take checks dated a week or so off. I've agreed to hold a check for a while. But I have the check in hand.

My advice now is to call or knock on the door, and ask for payment. Its pretty hard to ignore you when you are standing in front of them, so going to the house is the best bet. You will probably get paid.

If they actually come out and tell you they are not going to pay you, then tell them you will be forced to sue them, and they will not only have to pay what's owed, but you can tack on court costs too. If you have an attorney, their costs can be added too. I once took a guy to small claims court for a $450 inspection (gave me a bad check). I had an attorney I was doing EW work for and he walked to the court with me. As soon as my client saw my atty, he wanted to pay up.
His $450 bill quickly climbed. Court costs $80, serving fee $30, attorney fee $350.

Sure it takes time out of your day to go to court, but winter is coming, and you probably won't be that busy anyway.
Good luck!

[JB Thompson]

Some of these ideas are great! I really like Rick's ideas.

I agree with those who do not release reports until paid for their services. I've been doing that since I started. I think I may have lost a job or two, but no big deal in my eyes.

Too bad all of you guys aren't my competition, then we'd all be on the same page when it comes to getting paid, et al.

All of these young bucks coming in will wait to take payment at closing, do the inspection for .10/sf or less and eat a bug for $10. :D

[Matthew Steger]

What I do is take credit card info and charge the card if I don't get payment within 10 days of settlement. I rarely allow payment to go to settlement but a few agents here will only use inspectors who will offer this, so I offer it only to those specific agents. I tell everybody else that payment is due at the time of service.

[Jim Hintz]

Agree with Nick and Markus - Just say "NO". It's better to not work and not get paid than it is to work and not get paid. Been burned twice in the past when I was first starting out. There are several reasons a house might not close, but a snag in the financing is the most common. Not so easy to get a loan these days as opposed to pre-Oct 2007.

[Scott Patterson]

Make a Bad Debt page on your website! Post their name on it as a person who has not paid for your services. Post it on Facebook., etc..
If you have their email be sure you email them the links to the pages!

Another tactic is to send them the IRS form that request their tax ID or S number so that you can report the unpaid debit as income on a 1099! The form also says that if they do not comply that their contact information will be provided to the IRS. Who wants the threat of the IRS looming over them!

I have done the IRS letter and form a couple of times and I always had a check a week or so later.

[Jim Hintz]

Make a Bad Debt page on your website! Post their name on it as a person who has not paid for your services. Post it on Facebook., etc..
If you have their email be sure you email them the links to the pages!

Another tactic is to send them the IRS form that request their tax ID or S number so that you can report the unpaid debit as income on a 1099! The form also says that if they do not comply that their contact information will be provided to the IRS. Who wants the threat of the IRS looming over them!

I have done the IRS letter and form a couple of times and I always had a check a week or so later. Awesome Scott !!! :)

[Jimmy Roberts]

Follow the other posts. ALWAYS insist on following the ancient Chinese proverb... No Ticky, No Laundry. If you are afraid of losing a client due to their reluctance to pay as contracted, then you don't have a client anyway. I follow the practice others have said many times, I do not release an inspection report until full payment has been received. Paying in advance is always acceptable.

[Jimmy Roberts]

Be careful when you are a LLC, and you file on your own. If you are not a licensed attorney, you cannot represent the LLC in a court of law. It's called practicing law without a license. If you want the civil action to proceed after you filed on your own as a LLC, you will have to hire an attorney, or the case will be dismissed.

[Lisa Endza]

Did an inspection months ago and client was to pay at closing.The next time you permit a client to pay at closing, use this. So you want to pay for the inspection at closing? (http://www.nachi.org/closing2007.htm)

[Leigh Goodman]

Two thoughts: (1) What if you you have a signed agreement that calls for payment at closing and the closing does not happen? (2) If you have an agreement to be paid at closing do you not acquire a financial interest in the closing taking place? (no closing-no pay) Is a financial stake in the successful closing enough to make you write a report to insure closing takes place.

I decline to take payment at closing and explain that ethical considerations prevent me from having a stake in the success of the transaction.

[Ted Menelly]

Two thoughts: (1) What if you you have a signed agreement that calls for payment at closing and the closing does not happen? (2) If you have an agreement to be paid at closing do you not acquire a financial interest in the closing taking place? (no closing-no pay) Is a financial stake in the successful closing enough to make you write a report to insure closing takes place.

I decline to take payment at closing and explain that ethical considerations prevent me from having a stake in the success of the transaction.

Good thoughts

[Scott Patterson]

Be careful when you are a LLC, and you file on your own. If you are not a licensed attorney, you cannot represent the LLC in a court of law. It's called practicing law without a license. If you want the civil action to proceed after you filed on your own as a LLC, you will have to hire an attorney, or the case will be dismissed.

That might be true in Utah, but not in all of the States. I know TN, MS and AL allow you to represent yourself in civil actions if you are an LLC.

Now if you are an S Corp or Inc. you might need legal council.

[David A. Keating]

Did an inspection months ago and client was to pay at closing. Long story but their realtor offered to pay me 1/3rd the fee over a three month period. I told her I would not accept her money since it is not her debt.

Options are taking them to small claims or hiring a debt collector. Pros and cons of each. Court = about 4 hours of my time and debt collector takes little time but no guarantee of payment.

Thoughts?

I agree with others, chalk it up as an expensive lesson in "accounts receivable" Keep sending the buyer invoices both by email and snail mail. Maybe they will finally pay.
I also have been burned, but no more.
My policy is it's "cash & carry"

I do not release a report without payment in full. If they say they forgot there check book, I say cash is ok or I will take credit card. If they give me credit card info I run the card before I release the report.

It's a pain in the --- to remember who has not paid yet and the follow up it takes to get your money.

Once they have your report, you are way down the list of "important things to do".

[Terry Griffin]

I have accepted some "pay at closing" inspections. For the most part I have received payment, but also two or three times had to wait for two or three months for payment. I agree that the Realtor should never have to pay for the inspection. And small claims court further delays payment. If I havent received payment shortly after the end of the month I will send a collection letter to the client. Sometimes I have to chalk it up to bad experience and move on.

[Brian Cameron]

Two thoughts: (1) What if you you have a signed agreement that calls for payment at closing and the closing does not happen? (2) If you have an agreement to be paid at closing do you not acquire a financial interest in the closing taking place? (no closing-no pay) Is a financial stake in the successful closing enough to make you write a report to insure closing takes place.

I decline to take payment at closing and explain that ethical considerations prevent me from having a stake in the success of the transaction.

I have been taken payment at closing for a long while but I don't advertise it. Some home sellers agree to pay all closing cost and yes the Home Inspections can be included in the closing cost. I do have an agreement with the home buyer that if the house does not close that they are still responsible for the home inspections cost. Normally the mortgage company has down payment (escrow) from the buying and this inspection money can come out of that.

As for the start of this topic, I agrees with the others just forget about it regardless if the seller owes you money or the Realtor owes you money, you can give yourself a bad name, don't worried about that money its not worth the hassle. I would never take money from a Realtor. The state I live in would not take to kindly of the Realtor paying for a home inspection that the home buyer is making the purchase on, that just opens up another can of unwanted worms.....God bless everyone have a great month :)