Doing Deals with Family

A recent conversation reminded me of the perils of making unwritten deals, especially with family members. A potential client described agreeing to furnish certain monies in exchange—she thought—for certain property interests a family member held. The funds were furnished over a period of time, but when this person approached the family member about holding up the other end of the bargain she thought they had, she was very surprised at the relative’s recollection and understanding of their arrangement. Circumstances suggest her investment may not, in the end, be totally lost, but it sits in a very precarious situation. Clients in the past have been even less fortunate in similar situations.

Many contracts do not have to be in writing to be valid (although the common cases of real estate transfers or goods under the Uniform Commercial Code do require writings and sometimes additional formalities). If this potential client wished to, she might be able to force the issue with her relative through court action. But she has already determined that the cost of such litigation and the consequent family conflict would be higher than her losses if her relative decides to insist they never had a deal. She must now live with uncertainty regarding the funds she invested in her relative’s proposition, and feels she must minimize conflict with this difficult family member in order to maximize her chances at recovery.

Don’t put yourself in this situation. If you engage in transactions with anyone, especially relatives, that involve anything other or more than an immediate and complete exchange, please put it in writing, and insist that all parties to the transaction(s) sign the writing. To give a simplified, low-stakes example, if in conversation your relative says, “I’ll sell you my baseball card collection now for $100,” and you can immediately hand him the $100 and he physically gives you the collection in exchange, no big deal. But if your relative says, “I’ll sell you my baseball card collection next week for $100 if you’ll give me a 20% down payment now,” and you really care about the collection and your $20, write down the terms of your deal, followed by your signatures. Do not let your confidence that “we’re family” or “he’s a good guy” leave you exposed to the range of negative outcomes of an unwritten agreement, from innocent misunderstanding to intentional fraud.

If you are contemplating entering into an agreement involving higher stakes than a $100 baseball card collection, I would be glad to help you evaluate its terms and assist you in drafting or reviewing your draft of its terms. Please contact me to protect your interests at, or 651.280.0002.

A. E. King, J.D.
Attorney at Law
Shoreview, MN