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    The Greater Williamsburg area is an exciting place to live and work, especially because of the large number of entrepreneurs who have built businesses from the ground up. These entrepreneurs have taken their passion and made it their profession. Many of us want to take that step. Before you begin, you need to think of the type of business entity you want to form. Our attorneys have extensive business experience, from small one-person companies to publicly traded major corporations. Our attorneys are among the leaders in Virginia in the representation of Common Interest Communities. These communities are generally referred to as "homeowners associations," or "HOAs," and "condominium associations." In the greater Williamsburg area alone, we provide legal assistance to nearly 100 associations. Our attorneys have successfully prosecuted and defended a wide array of civil disputes involving community association covenant enforcement, commercial transactions, construction disputes, contracts, real estate matters, boundary line and easement disputes, employment matters, antitrust litigation, copyright violations, administrative proceedings, and estate issues. Real Estate law encompasses a wide variety of matters, and our attorneys have vast experience to assist you. Whether you need assistance with a commercial or residential closing, or you have questions relating to residential or commercial leasing, we provide experienced advice and counsel to our clients. Zoning law can be a complicated maze of statutes and ordinances. We have ample experience in successful applications for rezoning, variance, and special use permit requests. Finally, commercial and residential construction provide special challenges with respect to financing issues and the construction process. We serve as counsel to various financial institutions.

General Partnerships, The Way To Go . . . Financially Under

April 23, 2020 on 2:31 pm | In Business Planning, Merger & Acquisition, Neal J. Robinson | No Comments

 

Though the majority of businesses in the United States are sole proprietorships, those of you who read an earlier post know that I recommend, for a myriad of good reasons, that an entity of some kind be placed between a person doing business and the rest of the world. Find an experienced business attorney to help establish your business entity.

In this post, I address briefly the general partnership form of business entity, the only form I consider more dangerous to the financial health of an individual than the sole proprietorship.  Why, you ask?  Because with the sole proprietorship, the sole proprietor is personally liable for the acts of the sole proprietor, the business and the business employees.  In the general partnership, the partners are personally liable for the acts of the business, the employees and each other.  What partners do can be fairly unpredictable, like contracting to purchase or lease things that cannot possibly be paid for out of the profits of the business, or like contracting to do that which cannot possibly be done profitably.

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Preserve your friendships when borrowing or lending with friends or family – Document your transactions

April 23, 2020 on 2:30 pm | In Business Law, Business Planning, General Interest | No Comments

Many small businesses rely upon loans from friends and family for startup funds, for business expansions, or to support existing operations. Many times, these loans are made upon an oral agreement. As we have written previously, although oral agreements can be enforceable, without a writing, the terms of the agreements can be difficult to prove. In this blog post, we will describe other problems with informal lending transactions between family and friends.

contract, borrow money

In a study entitled “Lenders’ Blind Trust and Borrowers’ Blind Spots: A Descriptive Investigation of Personal Loans,” researchers outlined many of the difficulties of maintaining a lender-borrower relationship  between friends and family. In many “informal” lending relationships, the borrowers and the lenders remember the transactions differently. This “self-serving bias” can lead to problems. For example, borrowers may believe that the “loan” was a “gift,” or although agreeing that the transaction was a “loan,” may believe they paid off the loan. On the other hand, the lenders may feel angry when the “loan” is not repaid, especially when the borrower never raises the issue of repayment.

The study documented these differences between borrowers and lenders:

 Many borrowers thought the idea for the loan originated with the lender, not themselves, although the lenders thought otherwise;

 Borrowers reported far fewer delinquent loans than lenders;

 Borrowers were fairly confident they would eventually repay the loan, but lenders thought even one missed payment probably meant the loan would never be paid off;

 Delinquent borrowers “are much more likely to report feeling guilty, and also strangely, relieved and happy. Lenders associated with delinquent loans, in contrast, are much more likely to report feeling angry.”

Even though banks are flush with cash to lend, you may not qualify for a loan, or the bank’s terms may be too onerous. Consequently, family and friends are natural sources of funds for startup funds or for operating capital. However, as the proverb says,”Before borrowing money from a friend, decide which you need most.” Therefore, if you must borrow from friends or family, it is a small price to pay to perserve your personal relationships to have your business attorney draft the appropriate loan documents, including a promissory note, so that everybody knows the expectations of the transaction. Taking this step at a relatively small price can save your friendships.

Tarley Robinson, PLC,  Williamsburg, VA

Attorneys and Counsellors at Law

 

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When Raising Money For Investment Purposes From Any Source, BEWARE

April 23, 2020 on 2:28 pm | In Business Planning, Merger & Acquisition, Neal J. Robinson, State & Federal Litigation | No Comments

Raising money or obtaining other property for investment purposes from whatever source in Virginia, including from family and friends, implicates state and federal law.

Some may have read about the recent action for fraud filed by Andrew Cuomo, the Attorney General of the State of New York, against Ernst & Young, LLP, one of the largest accounting firms in the United States.  Some, noting that this action was not brought under the Securities Exchange Act of 1934, may have wondered from whence the Attorney General’s authority arose.  Authority arose under the Martin Act, a New York law initially passed in 1921, and amended and codified in 1982 in Article 23-A of the New York General Business Law.

What is important for those in the Commonwealth of Virginia attempting to raise money or obtain other property for investment purposes is that Virginia has similar securities laws.  Virginia’s Securities Act is codified in Title 13.1, Chapter 5, of the Code of Virginia.  As with that of the State of New York, the reach of Virginia’s Securities Act differs from, and is more extensive than, that of the federal securities acts.

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