Attorneys Advice: Control Everything in a Real Estate Transaction
In a conversation I had with Clint Coons, who is a real estate investor that owns over $12 million in real estate and an attorney that specializes in asset protect, he provided me with his best real estate investing advice ever, which is to control everything in a deal.
As an investor and an attorney, Clint sees many people go into joint ventures and then get involved in real estate deals, big and small. After a few years, everything seems to be running smoothly and both partners are happy. Then, eventually something goes wrong in the partnership where their hands are tied and they don’t know what to do, at which point, they come to Clint asking, “What can we do?” Unfortunately, the majority of the time, there is nothing that can be done when neither party controls everything.
Clint has a close colleague (let’s call him Joe) who faced this exact situation, when he entered into a development deal with someone. Together, they built a hotel development in Mexico, and Joe put in $1 million of his own capital. However, since this was a partnership deal, Joe didn’t have control of everything in the deal.
Everything was going great, until 4 years later, when Joe’s partner pushed him out of the deal! Joe thought that his only recourse was to sue. At a backyard BBQ, Joe asked three attorneys, including Clint, for advice on how he should handle the situation. The other two attorneys recommended that Joe should sue; however, Clint told him that he should walk away. He told Joe, “all you will do is spend a ton of money on attorney fees, but you won’t get a dime because you didn’t have control of everything in the deal.” Since Clint was outnumbered 2 to 1, Joe took the advice of the other two attorneys and took his ex-partner to court.
Flash forward to recently, and Clint ran into Joe again, where he learned that Joe had spent over $275,000 on attorney fees and got NOTHING!
The moral of the story: be extremely careful or don’t even go into deals if you don’t have control, because you can be pushed out by your partner and you won’t have any recourse to get your money, or more importantly, time back.