“Sterni mou gnosi, na se eicha prota!”
This famous Greek saying translates to “Stern wisdom, if I’d only had you sooner!”, or as my business partner Angelo likes to say, “Good judgment is the result of experience….which is usually the result of bad judgment!”.
A couple of years ago I naively bought a condo for “investment” purposes, i.e. as a rental that would eventually pay itself off leaving me with a nice little retirement pied-a-terre downtown. The price was right and it came with a rental guarantee, i.e. since the rent was lower than the overall carrying expenses of the condo, the seller guaranteed to make up the difference each month. Pretty sweet, huh? The broker even made arrangements for the notarial fees to be paid by the brokerage in order to facilitate the deal. Double-sweet, huh?
The deal was transacted by a top-notch notarial firm, and I eventually put pen to paper, skimming through the fine print of the contract, assured as I was that the notary had done the appropriate due diligence (I did say I was naive didn’t I?).
No sooner had I signed the contract, the tenant stopped paying the rent. In a rent-controlled environment such as Montreal, it can take up to six months to get a non-paying tenant out…but I wasn’t worried, hey I had the rental guarantee! Well, no sooner did the tenant stop paying, the seller told me to stuff it and go ahead and sue him for the difference! That’s when I discovered the perils of doing business with a numbered company (or any company for that matter) instead of with an individual. As my lawyer explained it, I could take the seller to court and most assuredly win since the agreement was written in stone, BUT….since the contract had been transacted through his company and not with him personally, I would soon find that that company had no assets to seize in order to execute the judgment! The lawyer also explained that this was a common practice among scammers, who usually do a number of deals in this manner simultaneously, and then just close the numbered company and open another one for their next set of “deals”.
Lessons learned: Know the company you are dealing with and make sure they have real assets and not just an empty shell and/or an office with two old typewritters. NEVER DO BUSINESS WITH A NUMBERED COMPANY. Make sure that an individual is up-front and central on the deal and that his personal assets (if he has any) are on the line. READ ALL THE FINE PRINT in any contract. GO TO YOUR LAWYER OR NOTARY AND NOT SOME BANK’S OR BROKER’S. Notaries and lawyers are only there to protect their paying client…not you!