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  1. #1
    Join Date
    Feb 2012
    Posts
    7

    Default Liability for Equipment Rental Fees

    My question involves business law in the state of: NY

    My husband and I run a small business. We are a sub-conractor that maintains foreclosed properties. We have a bit of a dilemma that has been ongoing since November now and see no resolution in sight. Here is the situation:

    We were given a work order for a property to repoint brick on a house. Since it was 35 ft high and 25 ft wide we told the bank we would need scaffolding set up on the building, which they approved. The money was advanced to the company we sub for and then to us to pay for the scaffolding. We had the company set up the scaffolding. The day we went to start the job, about 10 days after set up, someone was using our scaffolding and when we confronted them we were advised the house had been sold and he was hired by the new homeowner to repoint the brick. We immediately contacted the scaffolding company to come and take the scaffolding down. When they got there the homeowner arrived and stopped them saying that he was told by the bank that anything on the property he now owned when he closed on the property. The bank never notified the company that we sub for that the property had been sold. They actually sold it prior to the date the scaffolding was set up. We were advised by the company that we sub for not to pay the invoice from the scaffolding company for the set up and rental because the bank was going to go ahead and pay for everything and we were to return the advance, which we did. Not the company we sub for is saying nothing has still been resolved and that the contract was between our little company and the scaffolding company so we may be the ones stuck with paying the purchase fee plus the rental fee plus the $30 a day rental overage for this scaffolding because the bank never cancelled our work order and we didn't pay the contract and the scaffolding company doesn't have their scaffolding yet.

    Can we really be held reaponsible for these charges? I get that we have to pay the rental fee etc, but overage and purchase price should not be our responsibilty.

    Sorry this is so long. Wanted to be as detailed as possible.

  2. #2
    Join Date
    Mar 2013
    Posts
    16,747

    Default Re: Contract Issue

    Quote Quoting Kitkat5340
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    Can we really be held reaponsible for these charges? I get that we have to pay the rental fee etc, but overage and purchase price should not be our responsibilty.
    Yes to both.

    You rented the scaffolding. You have not returned the scaffolding.

    You may seek indemnification from whomever is responsible for the problem but your rental contract is with the scaffolding company and that's who you owe, including the price of the equipment and the ongoing daily charges until you get this settled.

    I suggest you reach some sort of cash settlement with the scaffolding company ASAP so the ongoing daily charges stop. Make sure you get the agreement in writing before you pay.

    Once you take care of that you can look to the bank for indemnification.

  3. #3
    Join Date
    Sep 2005
    Location
    Behind a Desk
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    98,844

    Default Re: Contract Issue

    You had a contract with the scaffolding company. You are responsible for every penny of rent you agreed to pay under that contract. The only person who can release you from liability under that contract, or tell you not to worry because they anticipate receiving payment from the bank, is an authorized representative of the scaffolding company. You owe them their scaffolding (or its value) and the rent.

    You should explore your options for recovering the scaffolding, as if you can return it you can at least save yourself the cost of having to replace it.

  4. #4
    Join Date
    Feb 2012
    Posts
    7

    Default Re: Liability for Equipment Rental Fees

    The homeowner is adamant that he now owns it. Police said it is a civil case and told the scaffolding company when they were there to take it down that they can't remove it until it has been resolved. It seems as though the Bank doesn't want to pay for it yet they are the one that told them he owns everything on the property, without knowing what was on the property. He closed before the scaffolding was set up. But the bank never cancelled anything.

    Awesome. So I will be out $18k plus.

  5. #5
    Join Date
    Oct 2006
    Posts
    15,184

    Default Re: Liability for Equipment Rental Fees

    Quote Quoting Kitkat5340
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    The homeowner is adamant that he now owns it. Police said it is a civil case and told the scaffolding company when they were there to take it down that they can't remove it until it has been resolved. It seems as though the Bank doesn't want to pay for it yet they are the one that told them he owns everything on the property, without knowing what was on the property. He closed before the scaffolding was set up. But the bank never cancelled anything.

    Awesome. So I will be out $18k plus.
    You are going to need to sue the bank, the company you sub for, and the homeowner. They won't all be responsible but it will put pressure on everyone to get the matter resolved.

  6. #6
    Join Date
    Mar 2013
    Posts
    16,747

    Default Re: Liability for Equipment Rental Fees

    Quote Quoting Kitkat5340
    View Post
    Awesome. So I will be out $18k plus.
    A lot more ($30 per day = $900 per month) if you don't settle with the scaffold company. Make sure you get a bill of sale.

    You are going to need to sue the bank, the company you sub for, and the homeowner. They won't all be responsible but it will put pressure on everyone to get the matter resolved.
    Agree, but you are going to have to pay the scaffolding company first because a lawsuit could take months or years.

  7. #7
    Join Date
    Feb 2012
    Posts
    7

    Default Re: Liability for Equipment Rental Fees

    I don't suppose this is something my GL policy will cover. This loss will definitely put our little 2 man operation out of business.

  8. #8
    Join Date
    Mar 2013
    Posts
    16,747

    Default Re: Liability for Equipment Rental Fees

    Quote Quoting Kitkat5340
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    I don't suppose this is something my GL policy will cover.
    I don't think so. My reference copy of the Comprehensive General Liability Form CG 0001 Edition 10/01 has the following exclusion:

    m. Damage To Impaired Property Or Property
    Not Physically Injured
    "Property damage" to "impaired property" or
    property that has not been physically injured,
    arising out of:
    (1) A defect, deficiency, inadequacy or dangerous
    condition in "your product" or "your
    work"; or
    (2) A delay or failure by you or anyone acting
    on your behalf to perform a contract or
    agreement in accordance with its terms.
    This exclusion does not apply to the loss of use
    of other property arising out of sudden and accidental
    physical injury to "your product" or
    "your work" after it has been put to its intended
    use.


    That would appear to eliminate coverage for the value of the scaffolding. However, I have not read your policy and have no way of knowing whether you have the same or similar exclusion or whether you have optional coverage that might cover it.

    All I can suggest is you report this situation to your insurance company and have them determine whether or not your policy has coverage.

    Quote Quoting Kitkat5340
    View Post
    This loss will definitely put our little 2 man operation out of business.
    If you don't want to spend the money on a lawsuit you have the option of considering bankruptcy.

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