Enforce judgment against owners of incorporated construction company?

[BravoSix]

What is the name of your state (only U.S. law)? Pennsylvania

In 2007, I contracted with a construction company to build me a home. I owned the land upon which the house was to be built, and transferred it to the construction company's sister company, a real estate agency. The "proceeds" of that sale were immediately applied as a down payment (in other words, no money actually exchanged hands). Both companies are owned by the same two men. These men are also the ones who do the actual construction of their projects, and one is a licensed realtor. After several months, and partial completion of the house, the deal fell through and I requested my money back as called for in the contract. The builder refused.

In December of 2009, an arbitrator awarded me a judgment of $147,000. I filed the judgment and placed a lien on the property. In speaking with the bank who holds the current mortgage on the property, a foreclosure action is imminent. Also, it appears that the two companies may both be defunct now.

If I am unable to collect on the judgment because the businesses are both defunct, do I have the ability to enforcement the judgment against the company owners personally? I believe both companies are/were incorporated.

Thanks for any insight you can provide.

 

[Andy0192]

... Also, it appears that the two companies may both be defunct now.

If I am unable to collect on the judgment because the businesses are both defunct, do I have the ability to enforcement the judgment against the company owners personally? I believe both companies are/were incorporated.

Thanks for any insight you can provide.

note: I'm not an attorney. I would suggest you hire one for the amount involved. A few hundred dollars spent getting good advice might save you thousands chasing after dead ends.

My opinion - PA sucks for enforcing judgements. You have to really know the in's & out's, and you really have to do some research & investigation to know what assets the person has that you might be able to go after.

Google the term "Piercing the corporate veil". There are ways to hold the individual liable for actions done under the corporation. That said, unless they still hold substantial personal assets, it's not a good sign if their corporations have gone bust.

 

[tranquility]

There may be some direct liabilities on the parts of the owners, so we don't need to get to piercing arguments as yet. However, this is a complicated fact situation and you do need to see an attorney to unwind it.

However, you may be nothing more than a creditor with no where to collect and the expense to find a piercing the corporate veil argument may be too great. It is certainly impossible without an attorney so that's your first step.

 

[JETX]

If I am unable to collect on the judgment because the businesses are both defunct, do I have the ability to enforcement the judgment against the company owners personally?

Depends largely on the TYPE of businesses involved (corporation, partnership, proprietorship, etc.).
(Personally, I will bet they are incorporated.)

If a corporation, then you will likely need some EXTENSIVE legal work. The problem is that under corporate law, the corporation is a separate legal stand alone 'person', with all the normal rights and obligations as if 'real'.
There is no real 'owner' of a corporation... it is owned by shareholders... and 'managed' by directors and/or officers.

As for whether an officer or officers of the corporation could be made personally liable will depend on LOTS of facts, such as whether fraud was involved, etc.

You need to see a good local attorney NOW.... hopefully before the corporation(s) 'disappear'.