DennisBeaverApril 21, 2012 (Original publish date) • By Dennis Beaver

Every day, all across America, hundreds of families who never planned on, wanted to or were asked, suddenly find themselves responsible for running a business, far too often lacking the skills or experience to be successful. Some realize their own limitations and immediately seek professional guidance. Others do not, wandering through legal and financial minefields.

Our story today is about Johnny (names have been changed), and today he is tiptoeing through those very mine fields. But before we tell you his story, a question:

How does someone who doesn’t want to be in business wake up one day, charged with the task of managing what is typically a fairly small, but might just be a multi-million dollar enterprise? And why do we use the term“families” to describe what is often just one person actually in charge?

Hanford attorney Ron Jones knows the two-word answer to those questions extremely well, dealing with them on a regular basis.

“It’s the passage of the baby boomers,” Jones tells You and the Law.

“Today we are seeing the greatest transfer of wealth in our nation’s history from one generation to the next: from very senior citizens to their baby boomers children, and from the baby boomers to their own children. They are the most economically productive of any generation in our country’s history. Now, their children are often stepping into mom and dad’s shoes, taking over the family business or other assets while the parents are still living, or through inheritance.

“While there are many families where parents taught their children how to manage the business, you will find just as many who do not. And then, one day, illness, disability or death enters the picture. That son or daughter who was content to be in a non-entrepreneurial position hopefully will be wise enough to obtain good legal, accounting and financial advice early on.

“Sadly, many do not, overestimating their own abilities and knowledge, maintaining a ‘know-it-all’ attitude — which can come back to financially haunt them. Poor decisions can easily put your own family at great financial risk,” Jones warns.

Own a rental property? You are in business

Johnny’s father was a baby boomer born in 1946 and became both a highly successful builder and commercial rental property owner in Southern California. For whatever reason, this was not a like-father, like-son relationship. He knew what dad did for a living, but was never motivated to learn the business. Beyond having Johnny occasionally collect rent, his father never insisted that he learn enough to handle day-to-day business operations in the event some emergency should occur.

Then one day a fatal heart attack changed everything.

It took this one, completely unexpected event, to place Johnny in the position of running a million-dollar business operation. “It was a job he was completely unprepared for, especially as he was now a landlord,” Lawyer A — his first attorney — told “You and the Law.”

“Even more critical was that he didn’t have the people skills necessary for successfully dealing with tenants.

“Johnny wasn’t an up-front guy. He was passive, hated conflict — saying yes when he should have said no — often never even responding. He would avoid any situation that required being direct.

“He didn’t have a clue on how to handle tenants who were chronically behind in rent, and this would later become the basis for a potentially expensive and nasty lawsuit,” Attorney A stated, on condition that his name not be revealed.

“I am talking with you, Dennis, as this is a story with a powerful educational message which I hope will help your readers,” lawyer A requested.

‘Nice guy’ landlords cause their own headaches

“There are so many people who lack the personality and knowledge to be an effective landlord. They desperately need to hire a property manager, but you would be surprised at just how many can’t accept the reality of their own shortcomings,” Jones observes.

“Property management fees run from 5 to 10 percent; when you’ve got a good one, the savings are enormous, not just money, but your sanity and keeping out of court. Nice-guy landlords invite being taken advantage of by their tenants. I do not mean that you have to be a jerk, but if any relationship requires not being liked, but definitely respected, it’s when you are a landlord,” Jones firmly maintains.

“I want him OUT!”

After months of dealing with one particular tenant who was consistently late with the rent, Lawyer A was hired to get the tenant to leave.

Though it was a month-to-month tenancy, it became clear that Johnny had done something months earlier — through his own ineptness — which enabled the tenant to stay for a very long time. And that’s our story for next week.


Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.



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