Welcome to Part 7 in a 12-part series entitled “12 Warning Signs You’re Headed for a Lawsuit with Your Partner”. If you missed Parts 1-6, click here to get to our Real Estate Investor bLAWg where you can find those and any many other informative blog posts. The seventh warning sign is …
#7: Previous bad track record of partner If your partner has a bad track record (failed businesses, failed partnerships), that is a warning sign that they will continue in the same path. Sure, people can change. But if you are playing the odds, the odds are that the more past bad experiences your potential partner has had, the more likely it is that those bad experiences had something to do with your potential partner as opposed to being just consistent “bad luck”, and the more likely the bad experience will repeat itself in some way, shape or form in your dealings with that partner. So, before you enter into a partnership with somebody, exchange your written track records detailing all past deals, including a list of all deals and partnerships that did not end well and why. For our clients, we include important language stating that each partner represents and warrants the truth, accuracy and completeness of those written track records because, if it turns out your partner misrepresented that information, it may lay the groundwork for you to claim “fraud in the inducement” and give you certain remedies. If you are already “in bed” with your partner and you do not know his/her track record, it is not too late. Ask. If you do not like what you hear, do your best to mitigate whatever risk you learn about based on their prior history on a going-forward basis. We can make further suggestions to assist on this if you like.
If you are entering a partner relationship of any kind, whether it is an LLC, corporation, general or limited partnership, call us. We can set it up to minimize the risk of future disputes. If you are having challenges with a current partner, call us. We may be able to help you resolve your dispute and avoid a lawsuit. If litigation with your partner is inevitable, we can handle that as well. If you’re not sure if your agreement is properly drafted to minimize your risks of future dispute and/or to adequately protect you in the event of a future disagreement, call or e-mail us to learn about our special “Partnership Agreement Audit” offer. Our clients appreciate the fact that we are investors as well as lawyers and use our business and investing experience to craft more practical, creative and effective solutions. For more information, call Jeff Lerman at 415-454-0455 x234 or e-mail him at [email protected].
