Thank you for reading. I’ll try not to get too in the weeds here, but I could really use some advice. I know I made a lot of mistakes here, and if I could go back would certainly do things differently.

Key facts:

• no written partnership agreement

• In business for 1 year, with 8 total combined clients

• 2024 total income $29,500

• No shared business property or initial investment. All listings and bookings belong to the homeowners.

I live in a VERY high demand tourist area with lots of rental properties and I have been working in property management for 5 years. 2 years ago, I ventured out onto my own because I was pregnant and wanted to work from home and stay with my baby. I had a few properties when a lady that owned a cleaning company I had contracted with previously approached me about combining forces on a property management company. She was studying to get her CA Broker’s License which would fully legitimize us, and allow us to manage funds on behalf of the homeowner’s and have ownership of the listings and reservations. (As opposed to building/soliciting them on behalf of the homeowner, and having them belong to the homeowner.) This would have been highly beneficial and is the sole reason I decided to join forces with her. She was also the “boots on the ground” person which allowed me to work remotely and be with my baby. She was supposed to have her brokers license by Dec 2023. She never accomplished this, but we took over management of a few houses and slowly grew throughout the year.

Over the summer, we got a “house manager” position at a very elite clients multi-million dollar property. This was not in line with the rest of our properties, as it wasn’t a rental property, but we decided to take it on anyways at it paid a high hourly income, and would likely bring in more than all of our other properties combined. My business partner had done work with this client through her cleaning company previously and headed all communication with this client including all invoicing. She told me there was no written contract with this client.

We had a shared Google drive account with all other homeowners information uploaded into it. Despite multiple requests (and promises to do so in text messages) across the span of months, my partner never uploaded the relevant information on this client, including the invoices. Upon requesting this information at the end of October via email, my business partner responded that “as previously discussed” this client was more of a client of her own separate cleaning company and not our shared client. (She was supposed to have fully combined her cleaning company with our shared company by 9/1/24.) I tried to reason with her and get her to retract her statement, explaining that I continued contributing clients and work to our shared company based on the fact that she represented this elite client as being a shared client. She dug her heals in and refused to correct the issue, and disclosed that she had been invoicing this client from her own separate cleaning company the entire time.

Since she had gone rogue, I locked her out of out email account and Google drive folder. There was client bank account information in the folder and she could have done significant further harm to our business. I still tried to reason with her to see if we could repair this, but she hired a personal injury lawyer (who happens to be a cleaning client of her) to start emailing me demanding I give her $125,000 for her 1/2 of the business, or else they are going to file a lawsuit. They even emailed me a draft version of the lawsuit they are “planning” to file.

I filed for a business license and started my own company. I informed her lawyer I was planning to solicit all of the clients, and proposed an agreement where I agreed not to contact the elite “whale” client if she agreed not to contact the remaining clients, and if we didn’t reach an agreement, I’d assume we were both free to solicit all clients. I never heard back, but all 7 clients apart from the “whale” client re-signed with me. I have not contacted the “whale” client.

I’ve since hired legal representation, but we are in very initial stages so haven’t gotten anywhere yet. My lawyer is saying best case scenario, it will be a walk away with her taking her one “whale” client and me keeping the rest.

How much exposure do I have? I know there is no basis for the $125k number, but should I be bracing myself to pay her out something? Her lawyer is a bully, and has provided 0 documentation to support his #, but is holding firm to that number. I know he’s just trying to scare me, but it’s working. I have an almost 2 year old now, and just want this to be done. I’m losing hope of this settling out pre-litigation. What is the likelihood that her lawyer will proceed with this? He is super sloppy in communications, constantly calling me and our business the wrong names which seems to show a lack of care. If this does proceed to court, am I screwed?

Any input would be greatly, greatly appreciated. So many lessons learned, and yes, I’m beating myself up over and over for trusting so much and being so loosey goosey with things.

Sacramento, California

0 Votes