a partnership with a lawyer...gone bad

Hello.
I had a real estate partnership (50/50) with an attorney on a piece of property. This is an attorney who acted as council to me in a prior civil suit. The attorney had very detailed knowledge of my personal and financial positions. We got into business together...where I was subsequently removed from the LLC. There are many issues regarding the various points of the partnership (LLC) contract. However, my first question is...

"Is there any law or rule prohibiting involvement of an attorney with a client in business dealings?"

We undertook this as friends and I never thought (of course) that it would come to this...is this an overlying point to pursue regardless of the LLC contract?

Thank you!

The first question is this: "Is the property held in the LLC or is your name on the deed?"

Thanks for your response BelizeBreeze!

The property is held in the name of the attorney...but the property was pledged to the LLC within the LLC document with the property description added to the LLC as an addendum. My name is not on the deed.

This maybe matters or not: the attorney has property in California which has a low limit of insurance available (due to state insurance laws) since it is located in a hazardous area. In order to more sufficiently cover the property (if it burned or washed away), the attorney wanted to get a loan against this California property for a high amount of money (which went to purchase the investment property we jointly owned, through the LLC, and made loan payments on) so that the Cal property was covered if catastrophe happened. Since the loan was in the attorney's name and against the attorney's property, my name could not be placed on the loan. We could have gotten a loan together by other means...but this was doing the attorney a favor in order to protect his property.

Thanks!

This is WAY to complicated to discuss on an internet forum. At a minum this 'partner' has questional business practices, and at the other side of the spectrum, you could be allaying yourself with someone perpetrating a fraud.

Get thee immediately to another attorney and take any partnership agreements, the LLC registration from the secretary of state's office and a copy of the real estate transaction if you can get it.

You need to stay away from this guy.

Thanks again!

You're right...this is complicated. Is the fraud you're referring to dealing with getting a loan against property that has a low limit of insurability? Apparently the bank didn't have a problem (that I know of) making the loan...are they also in questionable conduct here? I know I can get the deed...but does the "copy of real estate transaction" you're talking about mean the actual "purchase and sale" agreement? I would have to get this from either the attorney (not going to happen) or the seller (a definite maybe).

Just as a note, our LLC document, which is a generic "back of the book" NOLO document, now instructs us to go to mediation and then arbitration if necessary.

LLc

We undertook this as friends and I never thought (of course) that it would come to this...is this an overlying point to pursue regardless of the LLC contract?

Thank you![/QUOTE]


when doing business with anyone, never do it as friends , life is a business
Always do it as business partners and treat evrything as business
or you will get screwed

mesillakid said:

Thanks again!

You're right...this is complicated. Is the fraud you're referring to dealing with getting a loan against property that has a low limit of insurability? Apparently the bank didn't have a problem (that I know of) making the loan...are they also in questionable conduct here? I know I can get the deed...but does the "copy of real estate transaction" you're talking about mean the actual "purchase and sale" agreement? I would have to get this from either the attorney (not going to happen) or the seller (a definite maybe).

Just as a note, our LLC document, which is a generic "back of the book" NOLO document, now instructs us to go to mediation and then arbitration if necessary.

Click to expand...

The fraud I'm talking about is the transaction itself. The bank may not have had any problem with it, but did they know the true facts?

Also, if your LLC requires you to go to mediation then you go.

Thank you for all the help.

I've been offered a small amount of $ to walk away from this...but the property that we renovated over the course of 2 years is worth much more now. All indications are that mediation will not be successful if a true/fair valuation is requested by me. Which then leads to the arbitration.

Is this fraudulent transaction something which can be used with the arbitrator (or the attorney/former partner)? Should it be? Does that get into deeper issues which cloud the fact that I just want a fair resolution? Is the preparation for an arbitration the same as if one was planning to go to court? Is there a good site I could study what is all involved with the process?

Thanks again!

What is the best way to play the information of this fraudulent transaction (by my attorney partner). Can it benefit me in the mediation/arbitration process? How?

Thanks!!!