Solo Builder Indemnification Fund

[cpabolting]

Originally Posted by riorider

I know of two situations where the final payment was sent, and yet the guitar was not delivered nor completed, and communications went dark for some period(s) of time. Different luthiers, well known at the time.

I know in the last handful of years of three luthiers who died while still in their "productive years", meaning no one would have expected their deaths.

Those are the examples of cases that would seem to need some kind of escrow or other method to warrant to the customer that their funds could be returned if the luthier was unable to complete the build.

Personally, my apologies to any luthiers who I've inadvertently maligned by bringing this up. My intentions were much the opposite.

Best,

Phil

Exactly my point... there is no disputing the fact it has happened plain and simple. I certainly did not mean to offend any luthiers in my comments, just making the point that if luthiers have died unexpectedly, and there is no doubt they will in the future, there should be a reasonable means of protection.

[Bruce Sexauer]

Half he price of the theoretical Brazilian is quite another thing than a place in my queue.

I am pleased to share that I have deleted what I next felt to say.

[cpabolting]

Originally Posted by Bruce Sexauer

Half he price of the theoretical Brazilian is quite another thing than a place in my queue.

I am pleased to share that I have deleted what I next felt to say.

That was the example I used. In any case, what you said was 50% is what you require at the time you start. It is your business and obviously all of your decision. My point, which I am sure you get, is that if something were to happen after the deposit had been paid, the consumer would be in a complicated situation for some period of time and assuming your estate situation was properly administered and had resources to return the funds, nobody would be harmed. But we all know that does not happen overnight, it takes time, lawyers complicate things, and so it still creates a complexity that I think every consumer would like to avoid.

Anyway, protection for a customer's deposit is really the only point I was making, not about the merits of one's deposit system over another. I apologize if for some reason you though I was singling you out.

[RogerC]

Originally Posted by Howard Klepper

No. The above is what you are saying; it is not what I said.
--------------------------
So, Roger, you propose to equalize the relationship by adding more risk to the builder's side? That seems contrary to the spirit of this thread, which I thought was about risk reduction.

Sorry Howard. I missed this when I read through earlier...

I wasn't actually implying that my suggestion be used. I was trying to point out that your analogy wasn't really appropriate because at the end of it all, the builder has the guitar and money whereas the buyer has nothing. I'll definitely agree with you that there's more to it (risk-wise) than meets the eye though. Some of you have come on here to illucidate those points. I think this is a good discussion still. A few people have allowed it do devolve to an extent to an "us vs. them" debate, but on the whole, some good points have been made and allowed me to see more clearly from the builder side as well. As others have already said, there is no easy answer, but this definitely is not a case of a "solution looking for a problem" as someone else has suggested.

[CraigRyder]

Originally Posted by cpabolting

I am sure it has happened to 10 people.... that is not atypical. I am not drafting any policy, just suggesting that a customer's deposits should be protected. Do you not think one should have their deposit protected?

But it was just one luthier right? Those 10 people's experience w/ the same one luthier is not typical and I doubt that any insurance policy, as discussed in this thread, would have helped. As Larry pointed out, that is a topic that should not be opened up again here so I say no more about it.

Cheers,

[Laurent Brondel]

Originally Posted by cpabolting

It is a risk that's all and at some point in time, as it will be for all of us, you will pass away and probably have some unfinished guitars. And so it will happen to someone.

Cheers, let us all remain merry.
Is it not the case with any kind of activity where an exchange of money against goods and/or services takes place? The passing of the owner/maker really messes things up, doesn't it?
Joking aside, if the luthier kept his house in order and was honest it will necessarily result in temporary inconvenience for the customers, but not despoliation outright.
It reminds me of IT meetings where redundancy systems were discussed: it invariably ended with the possibility of a nuclear attack. Then what? Do we send a satellite in orbit carrying data backup? Where do we stop, how much does it cost?
I sincerely doubt that even if a large group of builders could agree on creating a sort of hedge fund, there would actually be funds to be regularly collected for the purpose and administration of such an entity.

[Randy Muth]

despoliation - Wow, I had to look that one up. Thanks, Laurent.

[Chas Freeborn]

Originally Posted by Howard Klepper

Given what a mess it is for a builder when a buyer cannot complete the transaction, I want to propose that people who order custom guitars form an association and purchase insurance that in case of death, disability, bankruptcy, bad investments, job loss, or just changing their mind (the last may be hard to price actuarially) will pay the guitar maker the full balance of the price (with shipping).

Now I like the sound of that, being it is the FAR more common scenario....said as I sit on a beautiful Alto commission that fell through. Nice guy that I am, I did not require more than the initial $500 deposit...which I will refund the appropriate percentage of when I sell the guitar...

It's on my website in the currently available section. Gorgeous guitar - it's the one I had at Healdsburgh last summer and a few of you AGFers gave it a spin.
-C

[cpabolting]

Originally Posted by CraigRyder

But it was just one luthier right? Those 10 people's experience w/ the same one luthier is not typical and I doubt that any insurance policy, as discussed in this thread, would have helped. As Larry pointed out, that is a topic that should not be opened up again here so I say no more about it.

Cheers,

No this has happened involving at least three luthiers perhaps more...and as these luthiers get older, or as accidents happen, it will happen again.

[cpabolting]

Originally Posted by Howard Klepper
Given what a mess it is for a builder when a buyer cannot complete the transaction, I want to propose that people who order custom guitars form an association and purchase insurance that in case of death, disability, bankruptcy, bad investments, job loss, or just changing their mind (the last may be hard to price actuarially) will pay the guitar maker the full balance of the price (with shipping).

I think it is the LUTHIER that has the obligation to make the customer feel secure about the funds entrusted to the LUTHIER...not the other way around. I think the "mess" you refer to Howard is far greater for a buyer with no money and no guitar because the luthier has disappeared is far greater then a customization you have done on a guitar and gotten a $2500 deposit because of the fact it was customized.

I think that is a completely separate issue when a buyer cannot complete a transaction and I think again escrowing a meaningful deposit that would go to the Luthier should the buyer not be able to complete the transaction would be appropriate.

[cpabolting]

Originally Posted by Laurent Brondel

Cheers, let us all remain merry.
Is it not the case with any kind of activity where an exchange of money against goods and/or services takes place?

I would say that is is a rarity these days when someone has to put up in cash or check, a deposit to someone geographically far away from them, and has no means of recourse against them if they try and take the money. That is why Paypal became so popular... protection for everyone.

There are third party escrow agents that handle transactions between individuals in commerce... I am sure it is just developing a special program that isn't all that complicated. Honestly like using a lawyers trust account.

[Matt Mustapick]

Each builder can rather easily solve this problem with respect to their own business, by making sure that commitments will be honored, no matter what happens. Many builders would welcome the opportunity to address any concerns to the satisfaction of potential customers.

This thread has posed a much much bigger challenge. This thread challenges luthiers to publicly, systematically, collectively take this head on. I wonder if this is more challenging than it is necessary.

[BEJ]

After reading this thread there seems to be some solutions to some of the cited problems without reinventing the wheel. Like alot of problems in life there are tried and true solutions that exist but we don't use them because they're old fashioned or not new or creative.

To cite just one, seems like if you're going to comit any large sum of money to anyone you should check them out and do some home work. I think it is possible to get a credit check done on someone, this may not tell you much but it could be a simple start to gather some info on a builder. This is a simple thing that has been around for awhile and is doable, if one is so interested in "protection" seems like this simple 1st step could the made to start their homework toward this quest.

I think there are other existing things that can be done without creating a whole new cost that no one will step up to pay if the can get out of paying it.

Bruce,

[HHP]

I suppose someone contemplating a build by a solo luthier could just discuss and agree to terms before committing any money and set an understanding of exactly what will transpire if either party can't hold up their end.


Nah, it would never work.

[Bords]

Stuff happens, anyone following (or been burned by) the Faustine Phantom attenuator debacle? Mouradian Amps?

I've had big money in a bunch of personal guitar deposits over the years and most went very well. One not so well but it was eventually resolved. It wasn't until that one that I realized how at risk I was, and how little recourse I had if things didn't resolve. I was younger with no kids for most of them so I assumed there would be some risk should something happen, and being out the money would have sucked but I could have lived with it. Plus I ended up becoming friends with a lot of these builders so bringing up the topic would have been awkward.

Now that I have kids and a lot more financial responsibility (and some more real world experience) I realize this is a very valid concern. One way I thought of handling this was utilizing an escrow service. There are very secure reputable escrows used all the time in business. Throw the deposit and any installment payments into the escrow with defined terms and it would be protected. Terms could include a timeline to protect against unreasonable wait times (monies returned if guitar not shipped in 2 years, etc).

I think this is one of those things you would never consider an issue unless it happened to you.