Fund / Syndication Checks and Balances

[Dani Beit-Or]

I'm looking to partner with a builder to raise funds for a syndication holding long-term rentals. We've worked through most of the financial aspects, built in buffers, and taken a cautious approach.

One key priority is setting up checks and balances to reduce the risk of fraud, especially when it comes to handling funds. I want to make sure there are multiple layers of oversight to prevent issues caused by a bad actor or rogue employee.

Here are some ideas I have so far, but I’m looking for more:

1. Two signatures required for checks over $1,000 – Does the bank actually enforce this? And what happens with electronic payments (Zelle, wire, ACH, etc.)?
2. I hold the account in my name and grant them access – Would this create any liability for me?
3. Legal agreements – Of course, I’ll have an attorney draft and review them, but I want to come prepared with ideas to strengthen protections.

What other safeguards or ideas do you suggest?

[Stuart Udis]

@Dani Beit-Or If I was an LP and learned one of the GP's believed it was necessary to implement systems that required two signatures for checks/payments over $1K, my immediate thought would be: Why does the person raising capital have such little confidence in the builder/partner? Clearly you have some reservations getting into business with this builder as well if this is something you feel is necessary. Red flags all around in my opinion if you can't trust a builder with authority over $1K (the cost of ordering and filling a dumpster).