- Jurisdiction
- Florida
Two siblings are listed in a mother's will as 50/50 owners of everything including a commercial property and a S Corp attached to the rental of that property. Sibling A is a licensed attorney and sibling B is a nurse. The commercial property normally brings in about $7000 per month in rental income but it is currently vacant. The mother is ill and has only a few years left to live. Sibling A Has been unemployed for 11 years and has been pressuring the mother to rent the property to her to open a restaurant. She has no restaurant experience so she plans to partner with another experienced restaurant owner (Partner A) to open this restaurant. Partner A likes the building but is not willing to invest the money needed into the building to renovate it....hence the motive for partnership with sibling A. Sibling A would invest the money into renovating the building and would plan to work in the proposed restaurant business. They want a 10 year lease (which will surely outlive the mother and therefore ownership of this building and the created S Corp which contains it will pass to Sibling A (50%) and Sibling B (50%) during the lease.
Sibling B is concerned that Sibling A is creating a power imbalance by this proposed scenario and potential financial and legal liability for her because Sibling A will be occupying the building and investing money into renovating the building. Sibling A has stated that if the restaurant business does not succeed she will stop paying rent and "screw sibling B". . Sibling A also has a history of committing mortgage fraud and federal financial aid fraud. The mother intends to protect sibling B by writing in the lease to Sibling A and Partner A that rent must be market value and that the 3rd party resturant owner is to pay his share of the rent directly to Sibling B. There is a large school which would like to purchase the building. Sibling B is concerned that she will have different goals from Sibling A regarding this building of Sibling A occupies it.
Are Sibling B's concerns founded? What ways could this harm Sibling B?
What happens if Partner A fails to pay rent and Sibling A refused to pay rent?
Once the mother dies and Sibling A is now 50% owner of building, can she choose to change the terms of the 10 year lease originally signed between the mother and Sibling A/Partner A?
Can Sibling A claim majority shareholder of the building or S Corp containing it if she has invested money and time into the building?
Can Sibling A block any sale of the building ?
If Sibling A conducts any fraud in her restaurant business with Partner A or if negligence on their part results in an injury/lawsuit with a customer, can Sibling B be held liable too since she will be 50% owner of the building and SCorp with Sibling A?
Sibling B is concerned that Sibling A is creating a power imbalance by this proposed scenario and potential financial and legal liability for her because Sibling A will be occupying the building and investing money into renovating the building. Sibling A has stated that if the restaurant business does not succeed she will stop paying rent and "screw sibling B". . Sibling A also has a history of committing mortgage fraud and federal financial aid fraud. The mother intends to protect sibling B by writing in the lease to Sibling A and Partner A that rent must be market value and that the 3rd party resturant owner is to pay his share of the rent directly to Sibling B. There is a large school which would like to purchase the building. Sibling B is concerned that she will have different goals from Sibling A regarding this building of Sibling A occupies it.
Are Sibling B's concerns founded? What ways could this harm Sibling B?
What happens if Partner A fails to pay rent and Sibling A refused to pay rent?
Once the mother dies and Sibling A is now 50% owner of building, can she choose to change the terms of the 10 year lease originally signed between the mother and Sibling A/Partner A?
Can Sibling A claim majority shareholder of the building or S Corp containing it if she has invested money and time into the building?
Can Sibling A block any sale of the building ?
If Sibling A conducts any fraud in her restaurant business with Partner A or if negligence on their part results in an injury/lawsuit with a customer, can Sibling B be held liable too since she will be 50% owner of the building and SCorp with Sibling A?