I have assisted many clients in disputes with family members or former partners. Due to confidentiality, I cannot discuss such cases, but I can generally discuss the types of issues I’ve seen. Please note that these do not directly discuss any particular case. Sometimes former romantic partners will go into business together, lend money to each other or buy real estate together. It can be difficult to resolve these differences because unlike in divorces where there are very clear rules, unformalized relationships are less clear. I’ve worked with many clients to help to extricate them from loans, to negotiate the winding down of businesses and other issues. I’ve also helped clients collect on loans made to other people, or to refinance real estate that is co-owned.
What is the first step in these informal business disputes?
The first step is to attempt to formalize these arrangements. Ideally, an attorney would be consulted prior to entering into these business relationships. For example, if the parties have a loan, then get the parties to sign a loan agreement to match the terms agreed upon. A written loan agreement (even if not perfect) is far better than no agreement. The most basic loan agreement should have at least a few items (although an attorney could do far better).
- The parties to the loan (also identify who is lending to which borrower and how much).
- The date the money was lent.
- The date the money must be repaid.
- The interest rate for the money. Please note that in California, the rate should be 10% simple interest per year to be safe.
- That the borrower has agreed to repay the lender the amount lent, plus interest.
- The Printed names of each party and their signature and a date for their signature.
- Also, if desired, that any prevailing party in a dispute shall be entitled to their reasonable attorney’s fees and costs.
That’s it. Well, it’s the minimum.
What is the second step in these disputes?
Communicate any issues, preferably in writing. So, if a party fails to make a payment when due, then write them a letter and email (the more ways the better) to ask them to pay. All parties need to remember to be courteous, as if a Court was going to read their communications (because a Court may read it one day).
What is the third step if these first two steps don’t work?
Call an Attorney to review the situation and get a consultation to discuss your situation.
What are some examples of types of disputes you have dealt with among family members or ex-partners?
- Multiple parties owning homes or commercial real estate together.
- Former family members of ex partners who lend each other money.
- Disputes over the engagement ring or other gifts given during a proposal or in contemplation of marriage.
- Family or ex-partners going into business together, such as running a restaurant, retail store, or a service business.
- People who own stock or made loans to a business owned by a family friend or former partner.
- Former family members of ex partners who are in landlord tenant situations, where one relative or ex partner rents out a house or other property to another and then wants to terminate the rental relationship.
- Winding down a business that failed, by negotiating debts, dealing with disputed claims from former employees, vendors, contractors and others.
- Buying out a former partner or family member to keep the business running but under different management.
