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.