00:00.62

wongga

Hello audience I'm your host Garret Wong of the investing to win podcast today I have the pleasure of having atav kocar from laing kocar law on the show attaff welcome to the show. So for those of you who.

00:12.24

Ataf

Thank you for having me gert.

00:18.52

wongga

The audience who don't know you Why don't you as just start off with ah telling us a little bit about yourself. What's your story and your background.

00:25.12

Ataf

Yeah I'll be happy to share that. Well it's interesting. My parents immigrator here from africa my brothers and I were all born in Africa back in 1980 s we moved here to winapeg 1981 and yeah I grew up in ca especially Winnipi here in sell St Patel I I okay at a young at a yet at a young age. My mom was always calling me Judgy you know in in in punjabi or.

00:48.63

wongga

Okay.

01:04.34

Ataf

Or do that that means judge and she always had a dream of be be becoming ah a judge and so it's interesting How your younger youthful years and your parents can shape what you turn into so it started from there actually.

01:20.71

wongga

Wow. Okay, so from there you went into law. Why don't you tell us a little bit about what that was like here.

01:27.27

Ataf

Well so you know initially I was in finance but I knew I wanted to do something more as when I was growing up in winnipeke a lot of my parents friends would tell me my friends parents would tell me you're going to either be a business matter or a lawyer or maybe both. And I always laughed at it because I loved to negotiate and and you know I was always known as a business guy growing up either just doing things that were naturally something to do with business and law and negotiating. So after finance. I went to law school I actually went down to to the states I want to leave Winnipeg because I'd always lived here but I always lived here and it was very cold like everybody from Winnipeg knows Winnipeg's known as winterpeg and so I I decided you know, let's try the United States my dream was to become an agent actually. To be a sports agent so I looked up schools in the United States and I found that Miami had 1 of the best programs for sports agents. So when I was 24 25 just turned 25 I moved down to Florida and I went to school law school in in Miami Florida. After law school during law school I was awarded an internship at the united nations and that took me to New York so my last semester law school I had the privilege of working at the un as an intern I lived in New York absolutely fell in love with New York and decided to write my New York state bar and.

02:57.43

Ataf

2008 it was an interesting time as you can probably recall 2008 was the financial recession. But when you're in law school. You're sometimes oblivious to the world around you even in any school you're just so ecstatic about graduating and starting your life. So ah I wrote my New York state bar pass that moved to New York in October Two thousand and eight for good and until obviously moved back to Winnipeg but in 2008 you see Obama get on the microphone and on televised national national. Television and say there's a financial recession and how this is going to impact us and then you start to consider. Oh this is this is an issue but at the time I was working for the attorney general of New York and that was a great privilege and honor and it was you know life lessons learned there. So I've worked in New York for about six years six seven years and then I moved back to whatapa in 2000 and to 16013. Okay.

04:01.28

wongga

Okay, and then you've been in law ever since in Winnipeg.

04:05.95

Ataf

Yeah, so I started practicing in Winnipeg 2013 I started with a small actually a lawyer that was about to retire and he gave me an opportunity because it was it wasn't the best time to get a job in Winnipeg due to many reasons but mostly I was coming. To Winnipeg in January in 2013 but I got some interviews with Taylorle Mccaffre and some of the big firms here at Winnipeg and Taylor mccaffy ended up hired me after I was working with this sole practitioner he was he was winding up his business and actually Taylor Mccaffrey was taking it over so I've been working in in Winnipeg now for the last ten years and it's. Been a great 10 years

04:46.79

wongga

Okay, and now you have your own shop but we'll we'll get into that in a little bit later. Great background I mean United Nations Sports Agent I mean so what when did the dream die or is it still a dream. Ah.

04:57.17

Ataf

Wow you know what? the dream is still alive but it's you you know? I'm just a sports huge sports fan like I don't I look I'll give you I'll tell you 1 thing my my son I named Kobe and I loved Kobe Bryant and and it wasn't because of that.

05:12.77

wongga

Wow.

05:16.70

Ataf

You know I love the name and it's got a good ringns. So my son's name's Kobe Koar and you know it's just I'm a huge sports fan and anything sports so hockey baseball football. You name it. It's not a soccer I don't like it or it's sorry ah a ah, a sport I don't like It's one of these things where I grew up watching sports early playing sports or sports early I had 2 older brothers. So I've always been competitive and I guess you know being a lawyer being competitor is actually probably an advantage for me.

05:50.44

wongga

Yeah, play hockey with a few lawyers. Ah you guys pretty intense out there. Um, well let's let's move on here. Um, the title of this podcast is actually joint venture dos and Don'ts and that's why I wanted to have a real estate lawyer on.

05:52.16

Ataf

Nice. Well.

06:05.46

wongga

Um, let's let's get back to the beginning. Can you briefly explain what a joint venture is in the context of real estate and why someone might choose to engage in 1

06:15.59

Ataf

Sure yeah, a joint venture arrangement as I call it I hate to use the word partnership because it can be ah seen as it can be seen as a partnership but it shouldn't be in some ways. It is some type of partnership but legally speaking a joint venture. Arrangement or agreement is between 2 parties, 2 parties or more. It can be 2 entities. It can be an entity or a person. It can be multiple of each but it's for a soul gently a sole purpose and and the goal is usually focused and it's usually for a certain period of time. So for example, it could be garret and ataf getting into a real estate transaction for a single family home to to Rehab. It refinance it and sell it or potentially hold it. But there's a goal There's usually an end to the the relationship. That's what a joint venture. Arrangement looks like now there is some joint venture agreements that can go for indefinite periods and generally and but there is a way to get out generally speaking and there should be an exis track but we can get into that later on.

07:21.28

wongga

Okay, so I guess the the general term partnership can be a joint venture but not from the legal term you're you're describing a type of relationship. Basically.

07:32.37

Ataf

Yeah, so partnerships are generally like partnerships should be seen such as a a relationship that may not have an indefinite end to a now not saying that partnership cannot a joint. Venture is limited generally to a scope. To a certain goal and that's why joint ventures are used more and more today. It's kind of like you're getting into bed with somebody but for a singular purpose or multiple purposes but they do have a definite end to it. Ah accomplishing a specific task. Ah, can be seen as just a home that someone buys or even an apartment block that you buy either. You want to Rehab. It sell it refinance. It. It's a specific business activity generally that you're getting involved in a joint venture.

08:25.72

wongga

Okay, because I mistakenly thought that a joint ventures Automatically when you're forming a corporation more of a legal term. But again, you're you're saying it's a beginning and an end ah goal in mind not just sort of. Owning shares in a corp forever and ever with with no purpose.

08:42.16

Ataf

I mean look can it be it. It can be a joint venture in a corporation to hold the shares until you want to deal with them but generally a joint venture. Is not a partnership that goes on forever at least in real estate now not not being said that you can't have it have there been examples of something similar to that I'm sure there are but for our purposes in real estate generally in Winnipeg and mapptoba most people that I've been dealing with. Most clients I've been dealing with they've been using a joint venture as a vehicle to purchase a property with another partner or partners when I say partners I get I'd rather say joint ventures because partners can be the term can be. Used but used incorrectly so whenever I speak to clients that are are wanting to use joint venture as a business vehicle to accomplish their certain task I always ask the question. What is your intent. Why are you using a joint venture have you spoken to your accountant. Accountant is one of the most important persons when you're dealing in business. Why because financial reasons are one of the biggest decisions you make right? So whenever you enter into any arrangement business arrangement. You want to make you're generally doing it to make a profit and you know losses do happen.

10:10.34

Ataf

But you should always talk to your accountant to say this this vehicle or this process. Well whatever I'm trying to do here makes sense financially is there a better way of accomplishing this objective or goal and so you can have. A a what you're saying a partnership and shares of a corporation for an indefinite period I would say you could have a joy venture like that. But I believe you should have it in an agreement in writing it should have a specific task if it's a more general task or more a general. Ah ah, Goal. That's okay I Just think you need to make sure it's in writing there's got to be other factors into play you we got to make sure there. There's there is exit strategy tax consequences, rules and responsibilities. So. There's a lot of things that you have to be able to Accomplish. And understanding what kind of arrangement treatment. You're making.

11:09.61

wongga

Okay, okay so I won't I won't use partner anymore I'm learning here I'm taking notes as you can see um but how important is the choice of a joint venture er um a jv in a joint venture and what factors should 1 consider when selecting.

11:12.11

Ataf

Um, and.

11:27.24

Ataf

So you know it's a great question and so it's it's kind of the that's like 1 of the first things I actually asked my clients do I go? How well do you know this person and usually they usually there's a lot of ways to answer that. Oh I know I'm from a group or I know from this and that.

11:27.27

wongga

That person or group.

11:45.90

Ataf

Oh no I've known him for a long time and I really trust them and I always say when you're getting into a business relationship with somebody. It's the same thing as when you're getting together with your girlfriend Espouse common law partner is there trust is there some type of trust there. Do you know the person how long have you known the person. How well do you know the person is there loyalty right? like these are common common sense questions that are sometimes overlooked also common goals. What is your goals What's the goal in this joint venture ah arrangement. Um. Is there clear communication between the parties does this person effectively communicate with you or do you been speaking to him for some time or she you know and you have to talk about contingencies and issues and details of the business arrangement I think a lot of people get into bed with somebody. But don't put it in writing I see it hand like I see it too many times and I always say to someone I go to my client I say look it's not when things are great. that's that's easy it's when things are bad. What do you have. 1 party is going to remember conversation differently than the other and the best way to recall something is if you have it in writing so choosing a partner is one of the most important things you you got to make sure that you can trust the person Loyalty Honesty there's clear communication all those factors.

13:16.32

wongga

Yeah that's a fantastic point. Um, you know I being in doing what I do and obviously what you do I see this time and time again and I think there is a misconception especially people who are diving into jvs. Ah as a beginner that. You know it's down to a really rock solid contract and things like that and you know being in law um a contract is fine to protect yourself, but you can't fall back on that when things go south I mean if there's arguing and and different things you write. Trust I would say first and foremost. And don't care what's in a contract you can't force somebody to do something.

13:58.38

Ataf

You're totally on point. There. The contract is what's good on on paper on on the 4 corners of the page. The issue is really what you just addressed. It is. Do you trust the person is the person trust is there trust there number 1 honesty again. It's all about who are you dealing with if you like the person that's great. But do you want to be in business with them. That's another thing and you know there's a lot of times that clients come to me. They go oh you know this guy's paid tons of money and he's great business. He's created business and I said well how do you know. And tell me how you know what do you think you know about this guy. How is he trustworthy or she's trustworthy this and that the contract doesn't matter at the end of the day like it's important from a legal standpoint to have a contract. But if the person is not trustworthy. You should never gone into business with them to begin with the contract's going to be it might protect. You. Might help you but it money else will hurt you as well. So yeah, you're totally on point. There. Oh yeah, for sure.

14:57.31

wongga

Yeah, it's very expensive to get out of a out of a contract. So um, so let's unpack contracts a little bit. Um, what are some best practices for negotiating these joint venture agreements to ensure all parties are protected and the agreement is fair.

15:14.41

Ataf

Yeah, you know? and so the number 1 thing I always tell my clients is look get legal right away and it's not because lawyers want to you know make tons of money on ah on a contract. It's not It's not about that. It's really about. Starting the contract in the negotiations from the getcko the right way when you start with a lawyer a lawyer is going to tell you here's 20 considerations I'm just giving you twenty. It could be 30 It could be 40 here are the considerations that you need to think about. Did you think about what happens at death. Did you think about what happens at taxes on sale or repine as what happens on disability. What happens if you have a third party come forward with an offer and is there any taalong drag on rates so a lot of things that you may not consider your lawyer is going to consider and tell you hey look. Did you think about this, it's going to get you to really start thinking about what a jv grievance should look like rather than oh yeah, we're going to make money or hopefully no losses happened and we're going to be able to pay back in six months well you know in a perfect world. Everybody would be in real estate. But there's a lot more moving pieces right. And and not only that. But you also want a lawyer to tell you look have you spoken to your account have you talked about whether this is the best vehicle to move forward with this this type of arrangement this type of transaction. So I think getting a lawyer right? off the bat is the best I also believe.

16:43.46

Ataf

You know if you know the party and you know the party for a long time. Obviously there's trust and loyalty there. You should write out some details right? from the get-go what is what is fair what is fair in this arrangement am I bringing capital what is the other person bringing is other person bringing a set of skills as it. they have contractors maybe they have construction background. There's things that each party brings to the table. But how is the agreement fair then is what are the percentages. So obviously you want to work out as much of the business terms as you might have heard that saying between you 2 prior to bringing it to a lawyer. However, if you're not comfortable with that and you need to speak to your lawyer first and you know you have other advisors and and you just want to know does this make sense to you have you seen this use this model used before does this cut make sense to you. You could always get advice from your your advisors to say yes, you know 60% in this situation makes more sense. All I've seen a management fee I've seen a property management fee evolved or a jc ah fee evolved and and this is how usually works and what standard in the industry.

17:56.32

wongga

Right? So what you're describing there atta is the frontend stuff the business terms who does what? just like again. Ah if you were going into a. Business you're you're selling in a restaurant or whatever it is. You're doing this I'm doing this I'm cooking. You're doing business development. But then what you're saying is you have to have a good advisor that's going to project into the future for the contingencies. What happens if I get sick what happens if you get sick what happens if 1 person gets divorced separated. Comma law things that happen what happens if you're bankrupt right? Ah, how does that affect our joint venture agreement the asset that we're trying to protect so it's trying to so have a crystal ball and cover all those contingencies before you even start.

18:42.74

Ataf

100% so that's why a joint venture agreement is very important. You should have a thorough thorough agreement I I tell my clients all the time if you do make an agreement and it's without a lawyer you are taking a risk now. Don't get me wrong. There is some forms joint venture agreements that people use every arrangement every joint venture deal that you do is different there's different parties generally they're different details you you you need to use a lawyer generally to get. The right drafting of a joint venture agreement you want to have a joint venture agreement that is what the deal is and sometimes you don't know what the deal is until you get lawyers involved because the lawyers are going to say have you considered that this clause is going to have an effect on this clause now because you've now changed certain things. And it's important that the other party or other parties as representation too because if they don't and you now have presented a jv agreement to a party that doesn't and they sign it. They could one day take it to court and argue that they did not get independent legal advice. Then the contract that you spent hours and thousands of dollars drafting is going to be useless right? And so I always say to my clients make sure that the individual or entities that you have involved have independent legal vice I've had time to review. It.

20:19.38

Ataf

And ask questions from their advisors because that is going to be a fair joint venture agreement they're gonna have an idea and understanding of what they're getting into and generally their council will reach out to your council with comments and changes and whether we make those changes or comments will ultimately be your decision but at least. Then we know they have to trust they grieve it properly.

20:41.63

wongga

Oh really insightful. Um, you know I'm thinking of when 2 people meet at a networking event. They're like hey let's I've got a deal here. You're bringing this I'm bringing that and the excitement kind of takes over and and you just want to move quickly. Um. But when you're talking about a $300000 bur that you're doing or a flip venture or a $3000000 apartment block take the time get everybody proper advice spend the money upfront. It's a pennies compared to what you could lose in the future.

21:14.64

Ataf

You know if I can mention something on that. Everybody's excited when it's sunny and it's beautiful and it's kind of like when you start dating somebody first right? Everything's great. Everything's lovely. You're so excited every every moment that you're with them. You got that feeling. The same thing with you know, a new deal comes your way and you're like oh wow, this is gonna be awesome, but you have to realize that there is so much work that needs to be done in the background to protect your interest but also their interest right? because an agreement only can work if it's fair for both sides if it's not fair for one side. It's not eventually. It's not gonna work and 1 party's going to complain and 1 party's going to be feeling like they got ripped off so it's a good point here.

22:02.48

wongga

Yeah, it's not unlike ah a marriage a prenuptial agreement I mean yeah, ah so let's ah, let's transition into advantages and risks because that's really, you know what. What we're trying to do here with this podcast to educate. What are the key advantages of joint ventures and what are some potential risks.

22:22.35

Ataf

Yeah, so that's that's generally one of the biggest things that we talk about with our clients. What's the advantage of of joining at a joint venture. Well there's a lot of vantages and there is risk pros and callings to everything right? So 1 of the advantages is that you share in losses with. Generally the other party depending on obviously the joint venture agreement what percentage of ownership you have but you are sharing that loss. You're also sharing responsibilities generally speaking unless of course the responsibility is a little bit different the responsibility for 1 party could be they bring the capital. That's their responsibility. You'll hear terms such as capital party and 1 party is the money party. That's the same thing as capital party and the other party is a working party but 1 of the advantagets of a joint venture is also 1 person's bringing a set of skills that the other party doesn't it can be somebody's finding the deal. Somebody knows the contractors understands the business better. It could be another party has money. It's that it's simple as that it doesn't have to always be money. It could be the other party is really good at construction. But the other party is really good at marketing. Maybe then the party's a realtor has some real estate background in selling and marketing a property. Maybe the other party has a lot of construction sets understands how to fix a crack basement a crack foundation or get permits or has contractors on the go. So there are a set of advantages to in having a joint venture. Also one of the advantages that we.

23:57.17

Ataf

Kind of mentioned earlier but in say it as an advantage is again. It's usually a specific task. Usually it's limited to a specific purpose right? So there's a limited time basis for a jb generally arrangement. You can make it as such and doing that can limit. Also your liability right? because if something goes on forever. There is a chance for more liability to occur. So. It's usually limiteded as scope and that's a good thing and so what are the risks or I guess cost or even a con can be. You are sharing the profits right? So maybe your profits you you expected a lot more and now it's a lot less right? um. 1 of the other the other things about risks is there is liability sometimes you don't control it because depending on the set of skills. You're bringing to the table. You're depending on somebody s else's skill and knowledge and and and you're you're expecting their contracts to do a good job. But if they don't do a good job. Well, you're still part of the joy venture and you still share the loss. So there is that risk and and damage damages can occur in cons but 1 of the risks is your reputation too right? You you're a joint venture with another party and you end up doing something terrible. Well you know house ends up being a total. You know you're building a new house and the foundation really. Sucks. But you're part of that group so it's reputational risk. Um, one of the other risks that people sometimes forget is you are bringing a set of skills that now your partner might learn and unless you are signing and and generally you don't see it so much in smaller real estate jv agreements.

25:35.22

Ataf

And arrangements unless you're signing you know a confidentiality agreementing and there's other things you can sign as well. Non-competition. Non non-solicitation exclusivity agreements. These are generally done by more public corporations that individual or that group is going to. Get to know your business trade secrets right? but in real estate most groups such as the groups that maybe you're involved with Garrett or eve myself is involved with a lot of people share Intel right? So it doesn't become a business trade secret if it's known to the public. Yeah.

26:09.13

wongga

Yeah I mean I p Intellectual property is I never thought about it that way as it as a risk but I mean really if you're getting together with somebody who has a better skill set or maybe you have that skill set and they don't. There's nothing stopping them from partnering with somebody else after they learn everything from you. Um, and you can't trademark that you can't protect that there's no Nda nondisclosure agreement that you're going to be able to write up that's going to protect you so it comes back to that Trust factor.

26:42.21

Ataf

It comes back to the trust factor and you know at the end of the day. The relationships don't always last right? We know that and whatever you do learn from somebody. It does improve your process and it probably improves their process as well. So There is a risk that this individual or individuals can take what they learn from you make it even better, right? Not maybe reinvent the wheel but make it better and they can start doing their own business without you and so that's there's poses and cons to this arrangement. And it just depends on your skill set and depends on who you're who you're getting involved with that's why I always see a lot of joint venture agreements that are with individuals that are not so real estate savvy but more they have a permanent job. Full time job and they're looking to make some extra money on the side through investing with people that are considered more working partners right? It's people that are in the real estate investing that are looking to buy acquire sell hold but the other party is generally just the money party that brings the money together. Wants to get a return on their investment.

27:54.93

wongga

Okay, okay, so you've kind of outlined some risks and mistakes there I know that one of the mistakes obviously is just jumping in without you know contracts are there any other mistakes that we can kind of warn people about before they go into these that are. Pretty common.

28:14.83

Ataf

Well so getting tax advice is very important. You know 1 individual might believe that a joint venture. Ah great agreement is the best way to deal with this specific purpose or transaction. I always say get financial advice right? for the get go your accountant's going to tell you your entire picture the account that you work with knows how much money you're making where the sources of income come from and is it the best use of this type of vehicle to accomplish your task when you're doing a business transaction. You always want to know how do I save probably the most in my taxes right? like whenever you're doing a deal You're not thinking oh I want to pay the cra even more money. Not to say you shouldn't you should pay what you what you owe, but most business individuals always look at. What is my tax obligation after I do something and what you want to do is use the tax code to your benefit so talking to a financial you know your advisor your account tax lawyer. You know you can talk to your real estate lawyer but your real estate lawyer is probably not going to get you. The. Expertise that you require and is not going to have the knowledge of your accountant when it comes to your finances. So calm mistake is not talking to your accountant initially and saying what other vehicles there are to accomplish this task in a more tax-friendly way now other mistakes is obviously.

29:43.71

Ataf

Not knowing who you're getting into business with a common mistake is really not I hate to say interviewing but interviewing the individual that you're dealing with if you don't know the person very well get to know each other before saying you want to get into business I can understand most clients want you know. They need something the other person needs something they think they're a good fit but rather than jumping into business Together. Do some more background do some more digging do some more due diligence really understand each other before getting into business now I know things are moving fast and this day and age everything's moving fast technology's Faster. We're always busy, busy, busy but I believe doing a little bit more due diligence in the front end is going to save you a lot of herd at the back end.

30:31.48

wongga

Okay, so let me summarize that because that was a lot of information. Um, no and don't apologize I'm trying to do this for the listeners and also for my own for my own brain. So for any joint venture we want to make sure that.

30:33.63

Ataf

Sorry for.

30:47.36

wongga

You're not just taking a template off the internet or maybe you have ah a jv agreement that you used similarly in the past and you're just changing names in a few terms but every situation is different so make sure that you know what you're doing in terms of the contracts. Do your due diligence on the partner or partners or groups that you're going into business with and make sure you know what they're about and try as much as possible. Make sure you get good tax advice from your accountants make sure that your specific situation and the situations of your. Your potential jv partners are such that you know the structure of the agreement and the vehicle the Corp Whatever it's going to be However, you're holding the asset is proper and then go to your lawyer to get everything drawn up. Make sure that the other person and parties have independent legal advice. So that whatever you're going into and signing can stand the test of time does that about sum it up.

31:44.60

Ataf

That's perfect. Yeah, you know all of that can go work together right? like all those things can happen almost at the same time and generally do your account's going to speak to probably your lawyer at some point and if he's not Then. You may want to consider that I always say who's to all my clients who say who's your account generally I know a lot of my clients accounts because they don't usually repeat clients but I always want to know who your account is what their advice would be how do we structure your share structure in this corporation. Is it going to be the same as other ones. So You always want have those communication with your biases and everyone being on the same page but you did outline it really? well here.

32:21.00

wongga

Okay, well thank you hope everybody was taking notes there. Um, let's talk about disputes because that's the ugly side. Um I've been involved in some some pretty pretty nasty ones over the last twenty thirty years and you know a lot of it to be honest. Has to do with because I had handshake agreements thought that everything was going to be okay, but how are disputes typically handled within joint ventures maybe speak to us a little bit about I don't know mediation arbitration litigation processes. What does that look like.

32:51.23

Ataf

Yeah, so you did hit all hit 3 big ones right? Generally the party is going to look to the agreement and the agreement's going to set forth a way to deal with dispute and it's called dispute mechanisms right? or there should be a process to finding the agreement number 1 how are you going to deal with dispute. If. It's arbitration or mediation or litigation. Obviously there's difference in each a mediator generally helps parties resolve a dispute a meteor doesn't decide it generally but helps you get to a a final settlement a arbitrpetrator. Generally will act like a court like a judge that's going to settle a dispute and generally arbitration is binding on both parties so you can't go back and now go to litigation now litigation is. You go to court and generally you're going to court. It's not a small court claim. It can be but generally, you're going to the court of Queen's bench or actually it's a king's bench now. Um, and it's going to be very costly and time consuming and when I say costly depending on the size of the dispute and and depending on. How many factors there are minimum to get to court in my understanding from litigators that I speak to it's minimum 5 to $10000 just to get to court and then for every hearing and every deposition and every pretrial order or anything that a litigator must do. Ah.

34:23.79

Ataf

It ends up being very costly. We're talking about Tens and tens of thousands of dollars and sometimes into the hundreds and if you're in bigger cities. Obviously the bigger disputes could be in the millions now arbitration is generally a less costly process. Generally you see that more in joint ventures because. Parties don't want to go to litigation. They want to try to go to arbitration or or at times you can have mediation in there as well as a mechanism. Um, you know it just depends on the parties I think mostly, you're going to see arbitration because there's a way of ah you know an arbitrator to act. As a judge and and provide a binding ah decision and both parties have to live with it.

35:04.66

wongga

Yeah I've like I said I've been involved in some nasty ones and the costs you're speaking about there I think you know you're not sugarcoding it the last one was a builder's lien with a partnership in a Corp that really we didn't have any agreements done. And we settled out. Um, and I think our legal costs were in like around thirty thirty five K plus the settlement. So I mean that was just to take us through to discovery we didn't even go to court I can't even imagine like ah you could just see it I think the settlement was less than the legal fees.

35:38.40

Ataf

Yeah, and I'm not surprised Garrett hearing that from you because litigators to prepare for court. They always have to be prepared to go to court does a better what happens even though you settled.

35:39.58

wongga

Right? I mean it's crazy.

35:52.99

Ataf

They still have to be prepared right? You don't want a litigator going into court or a court action a week or two away and not even being prepared. That's the problem with litigation is it can be very costly.

36:06.30

wongga

Yeah, well it takes hours and hours to prepare and then hours and hours to remind yourself I mean I can't even imagine to get familiar that morning of to to give your best game for your client. Um, let's let's talk about.

36:17.10

Ataf

That's right.

36:20.96

wongga

Exit strategies you you touched on it a little bit in terms of you know your Jv agreement. But what should the participants in a joint venture plan for in terms of exit strategies.

36:32.42

Ataf

Yeah, know exi strategy is like 1 of the most important things in a joint venture agreement. You always want to know what the goal is of course but you always want to know what? what is the exit. What is the exit strategy. What? Ah how do we deal with this transaction this property.

36:50.39

Ataf

What's going to happen at the end right? and so exit strategy is different for every individual and every client but think with a jv agreement with which which we touched upon earlier is you have to think about other things that happen in life death happens disability happens right? Divorce happens there ends up. Somebody ends up going bankrupt. How is that being dealt with it in the agreement is there an exit strategy for that and generally there is now you know jb agreement will say well what happens upon somebody's death what happens with the executor of the state who takes over what happens to the interest same thing for those other ones now. On a positive exit strategy and being a positive exit strategy would be 1 where the goal is actually reached how does how does the joint venture parties exit and now terminate the agreement well is it on a sale is it on a refinance and being paid out. There's different ways of structuring every jv agreement but that should be clearly defined from the from the beginning because the intent of the parties is very important. What is your intent in this trade venture arrangement. What is it 1 party wants more than the other some my party sometimes just wants a return of investment. And maybe that other party wants to hold on to the asset after a refinance it doesn't matter what it is it just needs to be set forth. Maybe they're going to both hold onto it for another 3 to 5 years to see how the market's going maybe the market at 3 to 5 years much better.

38:21.87

Ataf

Maybe they get a valuation that meets their criteria and they want to sell it at that time but there's different mechanisms of of an exit strategy. You can have a triggering event. Maybe the value of the property goes down 10% and there's an exit strategy if it dips to a certain number maybe sayit strategy if. If the market is on fire like it has been for the last couple of years and and you want to sell it and that's a trigger event. So. There's a lot of ways to have an exit strategy in place.

38:47.26

wongga

You know you said that word which intrigues me valuation because throughout however, long your Jv agreement is there's going to be a point during an exit strategy either accidentally or maybe you've reached the end where valuation comes in So. Let's let's I Mean. Let's say that there's a dispute or somebody gets sick and they have to leave but they need to get value for their share. Whatever that percentage is what typically do you use to value for valuation and that everybody can agree.

39:21.54

Ataf

So there. There are mechanisms in enjoy pincher agreement to talk about what happens on you know someone being disabled now in in typical and general transactions or agreements that I've seen or drafted. There's not somebody that gets knocked percentage-wise reduced in that situation and disability is something that happens unfortunately due to you know factors outside of their control.. There are some things that are sometimes in your control such as. Well if you go bankrupt because you now have a gambling debt or you have a lot of creditors. Well, that's probably in your control and so that your interest and percentage of interest coming back can be reduced in in a properly drafted Jb agreement. But when you're talking about reducing a share of an individual.. Generally there's a mechanism in the agreement that says okay, well do do death this that what happens. Okay so something happens as it on death what happens with your interest. Well it probably goes to your state. But then you get paid out now. There can be a mechanism to pay them out right Away. There may be an insurance policy in Place. There may not be.. There might be a time schedule or a timeline of when to pay back the interest or does the remaining trade venture party have an interest in buying out the sheriffs from the Estate. Um, but when it comes to I think.

40:53.47

Ataf

I Don't know if I answered your question correctly there here.

40:53.64

wongga

Well, there's two sides of valuation right? So you you touched on the the legal side in terms of value of the shares percentages. What about the value of the asset. The real estate itself.

41:04.49

Ataf

Okay, so and that's where we want to go? Thank you for that. So I would get a business valuator I would get somebody in real estate either an appraisal by a certified appraisal appraiser that gives you an appraisal that is actually what is the. Actual value of the property as a fair market value as of today right? So depending on the day that you want this so it today's may twenty. Third if you both parties agree look ah you know we're not or is not working out. We want an appraisal done. Um, let's get a certified appraisal right? You can also get. Not to say this is not a useful way of doing it but a real estate agent or 2 or 3 to give you somemark valuation now that's more of an opinion of value if you if you want to get an appraisal done. Maybe you wantt 1 or 2 maybe you don't like the appraisal. Maybe you get it there I generously think that you get a certified apprais. <unk>isel down on the the property the asset and that's a good starting point now you could also put the put the property up on the market with an agent and say you know is it two fifty nine two forty nine put it on the market see what someone's willing to give you then you maybe get what a true purchaser. Fair market value purchase is going to buy it right now. So you know can appraisals be subjective sure they can't be but generally, you're going to get a scope of what it is. You can also look at your property assessment from the city of winnipingg and they'll set that at you know is it two forty nine to 50 years to 62

42:38.40

Ataf

Generally, that's a decent scope I'm not saying It's always the best but that gives you a good understanding of where your assets valued at.

42:45.32

wongga

Yeah I think um, is it fair to say because I've done this in some of my shareholders agreements in the past that if all parties kind of say. Okay, if we ever split if there's ever an event. Let's decide right now who's doing the valuation. Let's put it in writing it'll be whatever appraisal group or maybe we will get 3 opinions of value from 3 realtors and you put that right in there. So I guess my point is if everybody agrees up front then it's a lot easier. To agree on that valuation later instead of having a dispute put it on the market and just try to decide on the fly. What it's worth.

43:23.60

Ataf

Yeah, you know, having everything worked out in the beginning is always better. Of course it doesn't always happen but having a mechanism in place when you want to know what the valuation of your asset is very important in every jv agreement. I've drafted I'll say almost everyone of them I always say make sure you have a mechanism for when there's a dispute death disability exit strategy whatever it may be that you can figure out what the value of the asset is and and. Whatever group you want. So if you have a group that you believe is better. You know I'm not just for lack of better terms here like Kushman Wakefield right like everybody knows Stevenson whoever you want to use you can use anybody right? There's a lot more praises out there. But having a group that you guys know is an incredible appraiser ahead of time agreed to makes a huge difference. Yeah.

44:28.31

wongga

Great. Okay, so we've got my summary if people want to roll back for that about best way to set things up and then yeah, make sure there's valuation I think that's an ah, incredibly important point to include in any jv agreement. Um, you know. I'm looking at the timer here that I have on the podcast I cannot believe 45 minutes have already flown by um, feel like we could keep going on and on. But maybe they'll have to be a part 2 for this. So I have 1 question that I ask every guest um and you know you are prepared for or you should be anyways, if you did your homework. So.

44:51.94

Ataf

No doubt.

45:02.54

wongga

Here we go So this is the investing to win podcast. How do you Define success and what does winning look like for you.

45:11.28

Ataf

It's a great question Garrett and to me success is getting and being stronger and better every day and is not just in one way and I mean this in every part of my life. So whether it's with my family. My work working out I physically mentally and spiritually want to be better each and every day I strive to be the best I can be I'm not competing against Garrett Wong I'm not competing competing against any other athlete up I'm not competing against any other lawyer I'm actually just competing with myself. And if I'm better each and every day and I'm striving to get better and my policies are better. My procedures are better each and every day we're fine tuning and every every time I think they could be better. That's success to me getting up with a positive attitude sharing what I know with my kids and making sure that they. Are ready to win the day is very important to me what does winning look like to me. It's you know in life. It's about being successful and success doesn't always is not driven by money now does being successful sometimes lead to money sure I'm sure it does. But. It's just being successful at your goals of what you want to accomplish each and every day um and you know winning to me is sometimes the smallest things living in the moment with my kids this weekend I was able to take some time not to look at my computer not to look at my my phone.

46:43.70

Ataf

And just being with them in the present of them in their presence in that moment right? Just the small things I was able to take them to the park Play play football with them and and tag and just do those things where to me that's winning because I'm on Earth enjoying my time with my kids and. Having a busy practice being a husband father brother son. There's a lot on you. A lot of precious right? and and we all go through it but sometimes we're we're running through life when we're we got to just stop and try to like they say smell the roses and and to be honest I'm. Um, trying to do that better more and more and I'm still still striving to get better at that. But.

47:28.54

wongga

I love it. Be the best version of yourself I know that a couple podcasts ago I I told the ah story of my 2022 in my 2 life scares and how that's that's shaped me so ah, good good on you. The good on you that you're you know you're prioritizing your family. You're not just working. And and you have balance.

47:45.78

Ataf

Appreciate that character. Yeah, doing my best to do that.

47:51.26

wongga

Okay, well, that's a great place to stop? Um, like I love to thank you I'd like to thank you for coming on the show talking about this, you know joint ventures I think it's a lot of value that our listeners are going to get and yeah, we'll have to have have we'll have to have you on the show again.

48:07.18

Ataf

Well thanks Gary! Thanks for having me appreciate it take care. But bye.

48:08.71

wongga

Thank you very much. Okay, all right take care.