Posted by dealmaker on April 03, 2007 at 14:56:25:
You’re client needs to see an ATTORNEY yesterday. I spent a bit of time in law school and have a fair amount of finance classes behind me, and I don’t know what’s going on here!
A few general rules to follow on investing:
If you don’t UNDERSTAND it, don’t do it.
If you have to BORROW money to do it, don’t do it.
If someone is willing to BORROW (which is what co. B is doing at 15% in a 6-7% market, they are a TERRIBLE credit risk.
On any “investment” you’re buying into ask the following question: “If I buy this today, and sell it tomorrow, how much of my original investment will I get back?”
In this case the answer to that question seem to be: NOTHING.
So I have a new client who basically took a hard money 2nd from Company A. With some of this money, she invested 200K in Company B which offered her a return of 15% for a contract of a year. This was arranged by her so called financial consultant/broker, who has affliation with Company A and Company B.
The contract, from Company B, supposedly stipulates that she will NOT receive her principal investment back if she touches her lien by Company A. Supposedly these two companies are not connected.
The financial consultant has also tried to refinance the client telling her that Company A will subordinate, which in reality, she was going to pay them off behind the client’s back. I personally think that Company B is the financial consultant’s.
Is this contract legitimate? How can a contract stipulate that you can’t touch a lien and hold you responsible for it? Client doesn’t want to lose her 200K investment