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Ever find yourself in a sticky ethical situation? Mr. Ethics has your back! Mr. Ethics is here to take your questions and give you his input on how to best deal with your situation. Have a question for Mr. Ethics? Send it to info@professionalconstructor.org and he may respond to you here on the Mr. Ethics Blog.

 

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Undecided

Posted By Mr. Ethics, Wednesday, June 24, 2015
Updated: Friday, June 19, 2015

Dear Mr. Ethics,

My partners are telling me we should be forming limited liability corporations for every project we do. They tell me that these “L.L.C.’s” will legally protect our personal assets and the assets of our regular company. They say our only risk is the assets that are in the L.L.C. for the project. Basically, if something goes wrong, we can walk away without much worry. I really like that idea but it kind of feels that in a bad situation we will leave others holding the bag. Can you give me some insight?

Regards, Undecided Partner


  

Dear Undecided,

  

LLC’s have been around for decades and are perfectly legal. Those contracting with LLC’s generally know what they are about. So there is nothing wrong with forming LLC’s as a project delivery vehicle. Ethics come into play when the LLC is deliberately underfunded for a project. This is often done to allow the LLC to draw off the profits from the project and then leaving the remaining parties to fund the project and claims that will arise. Consult legal counsel about the pros and cons of a LLC and then use it properly if formed.

Regards, Mr. Ethics

Tags:  Legal  LLC 

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Revenue Projections

Posted By Mr. Ethics, Tuesday, October 28, 2014

Dear Mr. Ethics:

 

We have submitted a feasibility study regarding revenue projections of a parking garage to be built at a sports facility.  The project owner thinks are projections are too low because we based our study on scheduled events and not possible, non-booked events such as ice shows; kid shows; etc.  Our study will be the basis for municipal bonds to be sold to fund the garage’s construction.  Is it ethical for us to use non-scheduled events in our study?  Doing so would make the bonds more attractive.

 

Feasibility Stymied

 


 

Dear Stymied,


I think this a situation that does not initially involve ethics.  I think you need to consult counsel or the securities agency that will govern the bonds to determine what you can and cannot include in your study.  Since this study will support the sale of municipal bonds there should be specific rules or guidelines to follow.  If you cannot use possible income and the owner still pushes for same, then I think you have an ethical and legal decision to make.  In that situation I would decline the owner’s request.

 

Mr. Ethics

Tags:  Bonds  Legal  Revenue 

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