How not to go into business with family

**Greebo** · 07-12-2010, 06:08 PM

Today I went to court.

I'm a landlord, as many of you know, and today was the first time I took a tenant to court for non-payment of rent.

I was astounded at the amounts some landlords allow to accumulate, but that's not the real story. (Oh and I won a summary judgment. Eviction will be scheduled starting in a week)

After my very very quick pro-forma case, I hung around, out of professional curiosity. I watched a case between a local shopping mall and a gentlemen well into his retirement years, with his son-in-law.

Plaintiff: Shopping Mall - had a professional account manager and an attorney present. Alleged back rent owed by the old man in the amount of $35,000~

Defendant: Elderly gentleman on social security. His son in law owned a food-court establishment in said mall. Seen it - never eaten there.

The summary: The old man signed the lease FOR his son in law so his son in law could open said food court establishment. Food place got behind a while ago, making partial rent payments. Blah blha blah - old man finds out there is trouble for the first time when court summons arrives. Never pays any attention to mail delivered *certified* to him from leasing company.

Depressing case where the lawyer and manager basically presented their side, then the judge asked the old man and his son in law a few questions, spoon feeding them through the court process, and ultimately ruled in favor of the plaintiff.

SIL will be evicted. Old man owes $35,000 ish. SIL wasn't on the lease at all.

Do not - repeat - DO NOT EVER blindly enter into business with family. If you don't know how to do business, DONT trust your family members to do it without proper formal agreements in place.

I'm in the real estate business with my mother in law. We don't do *ANYTHING* without written formal contracts between us. We are, sadly, the exception.

**Contrary Housewife** · 07-12-2010, 11:12 PM

That is sad in so many ways.

**Josephhgoins** · 07-13-2010, 08:50 AM

Can social security be garnished?

**Russ** · 07-13-2010, 08:57 AM

yeeeouch. What a hard lesson to learn for the old man.

**Greebo** · 07-13-2010, 09:20 AM

Originally Posted by Josephhgoins

Can social security be garnished?

No.

The mall will never get their money THAT way.

But that doesn't mean they can't submit him to collections processes and sue for assets like, oh, his house.

**ansley** · 07-13-2010, 09:41 AM

My father in law was a mechanic and opened a shop with his brother. My FIL did the work and his brother took care of the paperwork. They split the cost of opening. All seemed to be going well until the brother got sick and his son took over the paper work. At that point the son gave FIL min wage and informed him that legally the shop belonged to the brother and if he didn't like it he could go somewhere else. Sure enough the brother had cut my FIL out of everything except his personal tools.

**JanieD** · 07-13-2010, 09:44 AM

I hope the SIL does the right thing & pays off the debt. It would be very sad if the older man lost his home or other assets. Being "uncomfortable" asking that the proper paperwork be completed is a sign not to go into business with them (family, friends or anyone). Excellent advise Greebo!

**bumplett** · 07-13-2010, 10:50 AM

that's pathetic.

**xtena** · 07-13-2010, 10:55 AM

Very pathetic.

As one of my favorite sitcom characters, Ricky Ricardo said on at least two occasions: 'Never do business with family or friends'

**umtallguy** · 07-30-2010, 11:21 PM

Well, I suspect the mall waited to evict them for several reasons. They were getting some rent vs no rent in this economy, having an empty food court looks bad and may hurt the mall etc....

I bet they waited to evict until they had another tenant lined up

**Greebo** · 07-31-2010, 05:45 AM

Originally Posted by umtallguy

Well, I suspect the mall waited to evict them for several reasons. They were getting some rent vs no rent in this economy, having an empty food court looks bad and may hurt the mall etc....

I bet they waited to evict until they had another tenant lined up

Not really important to the point of the story though...

**ncarr** · 08-01-2010, 08:46 PM

What a sad story

it's a shame the way some people take advantage of those who care about them the most.

**NikoSan999** · 08-01-2010, 11:23 PM

I'm pretty sure the company can't force sale. Definitely not if it's homesteaded and it's his primary residence. Most that could happen would be they put a lien against it.

But to the point, all on legal paper and READ, READ AND MORE READING. Never sign unless you know and understand what you're reading. Trust isn't worth crap when it comes to money and/or business.

**itlw8** · 08-24-2010, 10:55 AM

Originally Posted by NikoSan999

I'm pretty sure the company can't force sale. Definitely not if it's homesteaded and it's his primary residence. Most that could happen would be they put a lien against it.

Not sure what is involved with homestead but I do know not every state is like that. every time I hear of it it has something to do with Florida so I guess most states do not have that rule.