How to Lawsuit Proof Your Business

Here's how to make yourself bullet proof from lawsuits, malcontents and jealous peers:

Shut Your Business Down

Huh?

That's right: if you don't want to risk getting sued, raising the ire of people around you who hate their spot in life or jealous peers who gossip about you and your business like highschoolers at lunch time, then just pack your stuff up and get out of the game.

It is impossible to make everybody happy. You simply cannot do it. Stop trying.

One of the best money making principles I've ever heard is: "the surest way to go broke is to try and please everybody."

Truer words were never spoken.

But don't mistake this as meaning you should deliberately try to make people mad or be a jerk on purpose.

On the contrary, providing great service and value is first and foremost in any business owner (and real estate investors) mind.

Just remember that not everyone is going to be your biggest fan.

Why go on this rant?

There are several reasons.

Reason #1:

Frankly, I'm sick of talking to and hearing about real estate investors being taken to the cleaners by lawyers in some all noble effort to bullet proof their business with legal paper.

Can't be done.

No matter what you do, you can always be sued for something. That's the America we live in today.

It doesn't matter how good the contract is, how much disclosure you make, how many times you have somebody sign something. If they get mad at you and their attorney thinks they can get money, they could sue you.

Am I saying that you should never have a contract? That you should do everything with the shake of a hand?

I only wish it were so.

Yes, you should have contracts. You absolutely must provide the proper disclosures to your private investors before they invest with you. You must carry the right types of insurance.

But you should not delude yourself into thinking you are invincible because you've got some legal papers.

Reason #2

If you lose money for someone in a real estate deal, you stand a chance to get sued no matter what. It doesn't matter if you made the proper disclosures, the correct filings. People get mad when they lose money and they seek out recourse in any way they can.

If you make money for someone, while preserving principal value, you are very unlikely to get sued. You still might, but it is not likely.

This is why you must be extra careful with your investment selection when you are funding with private investors. Never over-leverage the property. Always have title, hazard and liability insurance. Be a good steward of the investors money.

Reason #3

Be not afraid.

I don't want you to be afraid to raise private money - or even get into the business - for fear of lawsuit or generating flak from others.

And...

I don't want you to be afraid of raising private money or investing in real estate for profit for fear of what others will say.

Sometimes people will say negative things about what you are offering with your private money investment.

Sometimes they will say negative things about real estate and how you "can't make money doing that."

If you are easily deterred or swayed by the opinion of others, shun your own carefully determined conclusions, then profits (and capital) will elude you.

To make money requires you to take bold steps. You must take action. Everybody said Henry Ford was nuts. Well, if that's the case I'll take a billion dollars and be called crazy than have empty pockets and get to stand in the approval of everyone.

Reason #4

Don't be a jerk.

Profound, I know.

Still, it's worth noting that you should keep an even keel in the face of the hyena's that will always nip at your feet. By simply stating and pursuing a worthwhile objective and productive existence, you are effectively thumbing your nose at the doomed-to-be-broke-forever masses.

And the masses won't like it that much that you stand out above them - or even strive to

Pay them no mind.

Put the blinders on and keep your foot on the gas.

-Happy Investing.