Home buyer loses major lawsuit over referral of a bad service provider!

As a home buyer don’t fall victim to a bad referral list of service providers.  Read on for more information.

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Obviously the headline was an attention getter.  But I am glad that you are here to read about a very important subject that can prevent you from being involved in the headline above! I will summarize the following information with a question.  Do you really know who is on that referral list handed to you?

I regularly help consumers around the country with their questions and concerns when they are confused, abused, and down right depressed over their real estate purchase.  As a basic procedure I generally will visit the WEB sites of those that have had dealings with them during their problems.  I view the entire WEB site to better understand the consumers claims and statements.  Over the past year or so I have seen an alarming trend that appears to be escalating with the current economic conditions.  On many sites the Real Estate (RE) Professional provides a referral lists for various service providers from Electricians, Plumbers, etc., and for RE Agents/Brokers the list also includes Home Inspectors. Many of these referral lists I have come across are significantly flawed, outdated, and potentially a major point of trouble for you, the consumer!

What prompted this blog post was the recent find on two different RE Professionals’ active referral lists.  One list had a Home Inspector whose license had expired well over a year ago.  The home buyer I worked with on this incident told me his RE Professional referred him to this Home Inspector for his home purchase inspection.  On another list was a Home Inspector whose license had been revoked by the licensing authority several months ago.  The Inspector whose license was revoked has apparently been recently caught still being referred for inspections and inspecting homes.  The problems with these referral lists don’t stop there.  I have viewed referral lists with people advertising electrical contracting services who hold no Electrical Contractors license (a Texas requirement), have no Master Electrician on staff (a Texas requirement).  Other lists have included handyman services who are generally advertising all manner of other licensed trades services with no licenses for any of those trades.  Using unlicensed people can potentially result in poor quality work which could cause damage to your home, or worse yet harm to you and your family from the shoddy work.

The RE buying process can be fast paced, confusing, and a very large undertaking for most consumers.  Consumers look to the RE Professional for guidance on their purchase, and many will implicitly trust what the RE Professional tells them or any referral list given to them.  If you, the consumer, are the victim of shoddy or dangerous work as a result of using unlicensed/unqualified people on a referral list you will generally have little recourse except potential protracted legal battles.  Most of these lists have one disclaimer or another about the accuracy or the quality of services provided.  If you take the issue to court then most likely you will be asked why you did not check the person/business out and instead use one of the hundreds of other available providers who are properly licensed?  In other words you could lose your case before it even begins.

One of the things that always is questionable about these lists is the name they give them.  Many use titles with words such as “preferred”, “partner”, or some other derivative that implies somehow that persons on that list are better than others and the consumer should use them.  If that is the case then you really have to ask why the list provider puts a disclaimer on that list?  If the businesses on the list are so good then why doesn’t the provider stand behind the list they hand you?  Many times the provider of these lists are receiving some type of consideration from the businesses they put on these lists.  That consideration is anything from actual payments, referrals from the listed business to the list providers’ own business, or even special actions the service provider performs during the service for you that benefit the list provider rather than you the consumer.

Select the next tab to read how you can help protect yourself and your large investment.

[tab: What You Can Do]

Not every referral list is bad, but many of them are bad or flawed.  Part of your responsibility as a consumer is to verify the people/businesses you are dealing with.  When it is all said and done you will have to deal with the results of your service provider selections.  With the disclaimers on the list, disclaimers in the contracts with the person providing you the list, you are potentially setting yourself up for problems.  You can not account for all eventualities, and even that person that was so honest and hard working to make it on that referral list can turn sour on us at any time.  Here are some tips to help you limit, but not eliminate, problems with referral lists.

  • Know a little about the laws in your State with regards to the people you plan to hire.  You do not have to read all of the laws but instead just enough to understand who must be licensed and what actions might require a license.
  • If you plan to use a provider on a referral list for a licensed function then by all means check them out.  Ask for a copy of their State issued license and check that it is valid.  For Texas professionals you can visit my WEB site HERE for a list of the links to the Texas State licensing boards license search functions and information.  Did you know that in Texas even a residential appliance installer is a licensed function?
  • Even though a professional might have an up to date “Professional License” are they also required to have a proper business license?  For example in Dallas all contractors are required to register with the City before performing services for residents there.  Other municipalities here in North Texas are quickly coming on board with that idea.  Ask the professional if they are properly registered for the area your home is in.  Then call your local city and county offices and validate what the service provider tells you.
  • If a licensed professional is required to maintain insurance coverage then ask them for proof of coverage, and check it out, before you use them.  Even if the persons license does not require insurance, if they are performing physical actions on your home (i.e. handy man, Electrician, Plumber, etc.) I would recommend not hiring them to perform physical work on your home if they do  not have General Liability insurance to cover any damage they cause to your home.  For these service people I would also recommend that you either require they display proof of Workmans Compensation insurance (disability insurance) or they provide you a waiver that they will not pursue you in the event they injure themselves on your property.  Many home owners do not realize that if a person is injured on their property they can attempt to make a claim against the home owners insurance which can cause you problems.
  • If you plan to use general handymen,  General Contractors (GC), etc., take a minute to actually interview them.  Find out what services they provide and how they accomplish them.  If they claim to perform work controlled by a licensed professional use great caution in hiring them.  Many will state that they “sub-contract” work to licensed persons when in fact they might not.  Also for example here in Texas only a licensed Electrical Contractor (who must have a Master Electrician on staff) can contract for electrical work.  That means if you use “Handy Dandy Home Repair Service”, and Handy Dandy does properly sub-contract the work, you will be stuck dealing with Handy Dandy in the event something goes seriously wrong.  Does Handy Dandy have proper insurance to cover a massive loss due to faulty sub-contract work??  If you check deep enough you will most likely find Handy Dandy’s General Liability insurance only covers his actions and not his sub-contractors.  In those events you might not be able to touch the sub-contractor performing the work for Handy Dandy since you did not contract directly with tat Electrician, Plumber, etc.  Ask for a list of the sub-contractors they are using for your job, make sure those sub-contractors are spelled out in your contract, and check those sub-contractors out as well.
  • If you are hiring any type of GC, handy man, etc., that does subcontract any work be very careful to make sure that the sub-contract person is actually being paid.  If that sub-contracted person (Electrician, Plumber, etc.) does not get paid they might well file a lien against your home later as you would be ultimately responsible to pay them.
  • If while using that referral list you find even one bad referral on it, regardless of the reason it is bad, then tell the person who gave you that list.  Also throw the list away and start looking for your own chosen people.  If there is one bad referral on that list then can you really trust the remainder of the list?
  • If you ever run across a person illegally performing work, or even advertising they perform work, then please notify the appropriate State licensing agency and any local government agencies.  You might well stop that illegally operating person from taking advantage of your Mother, Grandmother, good friend, etc.  Most all agencies will listen to a simple email from you so filing a report takes little effort and time.

By incorporating these tips, and following them religiously, you can help prevent from having problems with illegally operating service providers.

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PS Inspection & Property Services LLC is a full service home inspection and light commercial inspection company servicing the entire Dallas/Fort Worth metroplex.  We strive to for the satisfaction of our customers in everything we do.  Our services offerings include:

Buyer home inspections
New Home Warranty Inspections
New Home Draw Inspections
Home Maintenance Inspections
Home Remodeling Inspections
Investor Inspections
Rental And Renter Inspections
Infrared Thermal Imaging Inspections
Energy Audit Inspections
Whole Inspections Or Inspections Customized To Your Needs

If you have an inspection need we can customize an inspection for it.  Please visit our main site at PS Inspection & Property Service LLC.


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