The construction industry is one of the most litigious in America. Every year, thousands of lawsuits are filed for construction negligence, accidents, payment disputes, and so much more. But, when it comes to prequalification, many general contractors overlook the court records and rely on word of mouth or a limited screening process.
Why is that?
It’s time-consuming, tedious, and requires analysis of potentially hundreds of legal cases. Looking through every court record and determining what’s relevant is not realistic. The juice may not seem like it’s worth the squeeze. Unfortunately, both general contractors and subcontractors will inevitably be part of multiple lawsuits.
How could you not check the court records?
The court records reveal the truth about a subcontractor’s past performance. From unethical behavior to shoddy work, accidents, broken contracts, and financial problems, it’s all in the courthouses. Thus, a history of legal cases sets the precedent for future work. Setting up a legal review process may seem daunting. It could be potentially expensive and time intensive. There are a lot of legal terms that many of us do not fully understand. It’s quite simple and there are only three terms that you need to know – lawsuit, judgment, and lien.
LAWSUIT – a lawsuit is a claim or dispute that is brought to court for adjudication.
JUDGMENT– a judgment is an official result of a lawsuit in court.
LIEN – a claim against a property by creditors for them to collect what they’re owed.
To simply connect it all together, a general contractor may file a LAWSUIT against a subcontractor for a construction defect. The judge may dismiss the case or side with the general contractor. After both parties present their cases, a judge issues a JUDGMENT that indicates the lawsuit’s official result. The judge may then award money to the general contractor for damages suffered due to the subcontractor’s defective construction. The general contractor may also file a LIEN on the subcontractor’s property to collect this money. Thus, the subcontractor can no longer use or sell certain assets until they pay the original general contractor for what it’s owed. This may significantly impact the subcontractor’s ability to work for the next general contractor since their financial resources are now tied up.
What’s the best way to search for court records?
One may resort to a 3rd party database because it’s quick, easy, and popular. They claim to have access to every court record in America. However, this is extremely misleading and many general contractors waste their time with this option. These online databases give general contractors an incomplete service because they only capture a fraction of the court records in comparison to what’s actually out there. Take a look at the comparison below.
3rd Party Database Search
Courthouse Record Search
In simpler words, these databases omit all of the settled cases.
Did you know that the majority of cases brought to court in the first place are settled, particularly when the subcontractors know they are at fault?
It’s impossible for any 3rd party system to electronically centralize every local and federal court record in one database. There are thousands of jurisdictions in the United States and not all cases are stored electronically. In fact, some courthouses will not share their Application Programming Interface (API) technology to allow customers access the court records by electronic means.
Thus, the only solution is to visit the courthouses in multiple jurisdictions and retrieve the records manually.