Robert Koci
Placing my first lien – and getting sued in return for $250,000
Canadian Contractor Business ErrorCanadian Contractor's Rob Koci looks back on his framing career and cringes at the memory of the first time he ever placed a lien. It didn't go very well.
I was only four years into my framing career when I put my first lien on a house. The developer/GC owed me $1,800 on a labour-only contract to frame and rough-in a 2,000 square foot in-fill home in Toronto.
I placed the lien and moved on, but it was not long before I received a lawyer’s letter. It was in one of those very expensive looking business-size envelopes that open on the end and with the name of the legal firm embossed on the outside.
And it was thick, with page after page describing why I was solely responsible for the house being two inches over the 30-foot height restriction. And why, because of my error, I was responsible for all of the costs associated with having to take the build to the Committee of Adjustment and OMB.
I was being sued for $250,000.
For a 30-something framer living with his girlfriend in a basement apartment who had never been sued before, it was horrifying. My lively but naïve imagination had me very soon broke and living under a bridge with multiple addictions.
$250,000! I was scared shitless.
The evening before the first scheduled court appearance, I got a call from the developer/GC. He said he was willing to settle out of court.
“I’ll pay you $1,000, you withdraw the lien,” he says. In other words, the suit was a joke, a tactic. It was a letter that cost him $150 of lawyer’s fee to intimidate the crap out of me. He never had any intention of going to court!
Empowered by this sudden revelation, I gave him my response:
“The hell with you! See you in court!”
I was apoplectic that he would make me suffer for months thinking my life was over.
“Fine,” he said. “See you in court.”
Thirty minutes later, whether he was playing or not, I was again sick with fear. I called him back.
“I’ll take the deal,” I said.
“What deal?” he replied.
“Now, the deal is, you get nothing and you withdraw the lien.”
Lesson learned, I withdrew the lien.
If you have made a rookie contractor mistake as bad as this one, let us know, even if you have to use an assumed name. Rob tried to write this column anonymously, too, but we snuck his name in there to keep him humble.
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How can we make our story anonymous if we have to give you all our info?
John, kudos to you for registering under your own name. Most people don’t. Re-register under another name and then let rip with your story. Your email address is not published.
I would live under a bridge before I ever do work for a GC/developer of any kind.
It’s so easy to screw construction workers….
Subcontracts get used abused every day, and they get stiffed. They compete to be the cheapest bid only to end up in a high risk, high stress situation. Developers fall into two categories. Greedy scumbag thieves, and incompetent financial disasters. The solution is simple and easy. All projects should have to be submitted for review before financing, or permits are given. The sub trades named in teh project should be paid directly by the financial entity. The project should be overseen by an engineer firm who signs off on the sub trades. The developer only get paid from what is left over and is last in line. This would stop projects go ahead that have no funding, or that are not capable of reaching conclusion. It would stop developers using sub trades as money lenders and unwilling financiers. I remember my first encounter with a sleazebag developer. He funneled money from one project to start another. He stiffed tradesmen on the first two projects and was 1/2 into his third project. Leans were placed. Every asset teh developer had was in his wife’s name. The tradesmen got nothing but court costs and a ruling that said the developer was to pay them. The developer declared bankruptcy on his company and laughed in the faces of the tradesmen. He started a new company (under a third parties name) and was working the next week ready to play the game again.
The solution is easy. What is the government doing to solve the problem – nothing. Time for some cowboy justice.
When I first started on my own I wanted to be the biggest, richest guy around. I would take on everything and anything. got hooked up with an interior decorator and they gave me lots of work along with other contracts I had. Decided to take a family vacation and left one guy in charge of all the work. Explained everything and had guys lined up to do the work. got back from holidays to find out he sent everyone home and did not get even half the work done I needed done. As him about it and he thought it was not all that important. Was so far behind schedule at that point in time with all my jobs the decorator kicked me off the job and never paid even for the work I did do. That year cost me about $40,000 but saved me from being sued. That was stressful but learned a lot about work, business and people.
Steve, Robert,
I hope this article moves along, I have posted it on facebook, twitter and Linked IN. Believe me this is more of an issue than you realize and one can only hope those affected whether anonymously or not post their stories.
I can pretty well guarantee just about every contractor and supplier in this Province has faced this. I guess over the past few years someone in Government has paid it some attention. Just prior to our last election the Prompt payment legislation was introduced in QP, it did get to a second reading, however like a number of bills brought forward died on the floor when Parliament was dissolved.
I can offer you this little intrigue for you, I know as fact over the years right here in Durham there are a number of homes sold and occupied however not one single trade or supplier ever received a red cent. You can bet every penny you have that Durham is not unique.
A light bulb just went of, you question why there were no liens on these properties. The reason is simple the liens could not be legally registered. Some bright government official back in the late 80’s or early 90’s to protect he purchaser and the bank, decided to change the lien act. The 45 days is still the rule of thumb but with a twist, you could no longer lien a home that was occupied or financed by a third party. You could however lien the land adjacent if it was owned by the builder.
Hence a new loophole was created, the developer is the owner of the property not the builder, even though both may be owned by the same person or group of persons as Canadian Law dictates an incorporated company is a separate individual. Therefor the lots are provided to the builder on consignment.
There that went.
As you well know over the past 25 years in this business I have seen it all and will add another little tid bit. This industry was a once wonderful career, you question why there are no young workers replacing the old. This is one of the reasons, do you think any of us would want our children to partake in this madness. From the taxation and Government nanny state red tape to this treatment we would never allow our kids to face. How many young men and women have seen their parents beaten and broken by this industry. A lot more than you think. Everyday I question why we even continue. Its no longer a career its a task to stay a float.