Cost of E & O insurance

[Allen Brown]

-

Do absolutely nothing to do with condos - period. They're the single highest liability type project.

Condos - highest risk project type.

Wendy, I don't doubt you for a second, but would you mind elaborating? What sort of condos are you referring to? I have 2 subdivisions of retirement condos under construction right now, doubles mostly a few single units. Two different developers, one selling outright, one selling just "paint-to-paint". I have a great relationship with both developers, and all has gone well so far. I have never considered these high risk projects, but maybe you know something I don't?

Thanks,

[clinton]

As a Structural Engineer licensed in NC and SC, I was able to obtain E&O insurance through for $1,600/year and payments of $406/quarter for $1 mil coverage. I am using HRH ( www.hrh.com ) who shops the E&O for me and gets the best deal.

Grace to you,

[PhoenixConstruction]

Allen;

Can everyone say it together; "Class Action Lawsuit". My insurance carrier forbids me from having anything to do with "multi-unit projects". This is because of the possibility of two or more homeowners getting together over coffee one morning and deciding that the stair treads are spaced 1/8" to much for comfort and contacting a lawyer who will rally everyone in the complex to the same consensus, and sue the designer, builder, developer, roofer (yes, they name EVERYONE, just to be safe - And once you're named, that's it), and pursue a lawsuit where the attorney stands to make millions of dollars, while the claiments might get enough for a quality lunch at a drive-thru burger joint. Some of my subs in years past, who've been involved in multi-units and tract homes, have seen their insurance rates go up 10 times, just for being named in the suit, subsequently leading to thier demise.

[sutcac]

The 2002 "right to repair" law has started to ease this very bad situation in the condo market and some E&O carriers are starting to respond. Mine allows me to do a certain percentage of them in any given year. I did a six-unit one two years ago but it has never gotten built. Just didn't pencil-out once we finally got Planning approval, and partially due to the dip in real-estate.

Here's a good article-

http://www.triallawyersinc.com/ca/ca03.html

Hopefully this will turn around, as I think we desperately need more affordable housing in CA.

[perryh]

Richard
Apparently you don't know a thing about l.l.c.'s. To pierce the Vail you must prove fraud. Negligence is only for compensatory damages. I,m glad your not my lawyer. The best thing is to just not put yourself in that position. I,m done with this, as some people need to ask any good lawyer with l.l.c. experience.

[perryh]

Lew
No meetings is right, you better check it out with someone who knows. Ive had mine for about 15 years with no meetings here in california.

[Richard Park]

Allen;

Can everyone say it together; "Class Action Lawsuit". My insurance carrier forbids me from having anything to do with "multi-unit projects". This is because of the possibility of two or more homeowners getting together over coffee one morning and deciding that the stair treads are spaced 1/8" to much for comfort and contacting a lawyer who will rally everyone in the complex to the same consensus, and sue the designer, builder, developer, roofer (yes, they name EVERYONE, .

You don't even need the owners to think it up. In Florida (at least years ago) there were (are?) law firms that made presentations to condo associations informing them how much money they could collect by suing the builder, developer and anyone who set foot on the project. And they list 'problems' rather they are real or not. You have to prove that they are not!

Dick

[James A]

On multi- family, where the probable lawsuit will come from a homeowners assoc. complaining about hairline stucco cracks etc, a developer I know does the following:
Architect and developer both form LLCs under their corporations and conduct all work through these LLCs and dissolve them at completion of each multifamily project.
All engineering consutants have contracts with developers LLC and not with architect. Most lawsuits are aimed at the structural engineer.
I have not done this but I reviewed it with several attorneys and they all said it is the best protection possible.

[RMorrison]

Richard
Apparently you don't know a thing about l.l.c.'s. To pierce the Vail you must prove fraud. Negligence is only for compensatory damages. I,m glad your not my lawyer. The best thing is to just not put yourself in that position. I,m done with this, as some people need to ask any good lawyer with l.l.c. experience.

I'm glad I'm not your lawyer, too! Here, you can get an education: http://www.limitedliabilitycompanyce...liability.html
It's written by an attorney, so you don't have to take MY word for it

or, http://www.zlc.net/PDF/ZLC%20spring%202005.pdf (see page 2 under "Incorporation".)

[Ben Palmer]

Great links, thanks Richard.

[lbuttery]

No meetings is rig

Perry:

I understand that you aren't having meetings but that's the point. Without observing business formalities you open yourself to having the courts "piercing the veil".

I found these references with a quick google search:

http://www.mmmlaw.com/publications/a...3&articleid=37

http://www.easybusinesslaw.com/artic...erce_corp_veil

http://www.weissandassoc.com/article...liability.html

Other than the occurrence of fraud, courts normally consider three criteria in determining whether to pierce the corporate veil:

inadequate capitalization,
failure to adhere to corporate formalities, and
abuse of the corporate entity so as to amount to complete dominance by the shareholders.

Fox, 62 Geo. Wash. L. Rev. 1154. Most courts rely on some combination of factors in deciding whether to pierce the veil or maintain shareholder limited liability. Id. It is likely all three will be applied, in varying degrees to LLCs and LLPs.


Disregard as Separate Entity. The last factor of the corporate piercing doctrine that may be applied to LLCs and LLPs is whether the entity is operated as a separate entity or if it is the alter ego of its owner(s). This encompasses such things as maintaining separate bank accounts, keeping separate personal and business funds, keeping separate books, etc. If the entity’s separate identity is not respected through commingling of assets or the like, the risk of piercing of the veil is increased. Note that after the "Check-the-Box" regulations and the proliferation of "disregarded entities" for tax purposes, the risk that appropriate records will not be maintained increases substantially for such entities.



You need to find yourself another lawyer



Lew

[perryh]

Decisions to Date. No court has yet pierced the veil of an LLC or LLP in Georgia. In other jurisdictions, a federal district court interpreting Louisiana law has held that the veil of a LLC may be pierced if a LLC is operating as an alter ego of its members or if the LLC members were committing fraud or deceit on third parties through the LLC. Hollowell v. Orleans Regional Hospital, 1998 U.S. Dist. Lexis 8184. In another case, the Eighth Circuit refused to pierce the veil of an LLC because it found no element of injustice or unfairness existed that necessitated the piercing of the veil of limited liability. Gallinger v. North Star Hospital Mutual Assurance, Ltd., 64 F.3d 422 (8th Cir. 1995). Both of these courts applied factors that are used to justify piercing the veil of a corporation.


Lew
This was taken from your own source. Case closed, you lose. Get a life.

[lbuttery]

Perry:

If your going to get snotty then this discussion is over

good luck

Lew

[alobartn]

Hey guys, and especially Perry. The purpose of this forum is to disseminate helpful information to Chief users. Not to argue, although healthy debate can produce positive results. Being "right" gets you nowhere. Who cares if you "win"? Let's keep it civil. As someone's father used to say, Don't make me come over there!"

[WendyWelton]

Allen,

"...class action lawsuit..." - yep, therein lies the rub.

Condos are high risk because the end user is not only an emotional homeowner, but an entire committee of them. That's before you add predatory lawyers to the mix. And yes, once somebody decides to let the dogs out, they let them all out and sick them on everybody. It's called "mud against the wall" or the "scatter suit".

Adam,

Yes please, and thank you.

All,

I have a new tactic for dealing with childish behavior - absolutely no response whatsoever. Let anybody who's talking trash talk to themselves.

Lew,

I may not agree with everything you say, but I appreciate that you're always a gentleman here and always keep an open mind. Keep up the good work.