Let me play devil's advocate for a moment.
You help a friend out showing him the ropes on the first home and he makes a sweet windfall. His appetite is whetted and you help him with the second home, he makes a windfall and you get a few crumbs (commish). So he's made $175K and you've made what...$10-25K?
This is where it goes off in the ditch I think...you decide to bring him in and give a fair amount of control in your 10 home development project. Exactly what was he bringing to the table? Must have been money or raw land or asssumption of some potential liability. You certainly did not expect he was a wunderkind with a midas touch based on his limited experience of flipping two homes with your assistance, did you?
His appetite was whetted with the first two deals. Did he not realize potential problems in trying to go from turning one house to a 10 house development? Was it communicated to him? Doesn't sound like it to me. BUT, given his limited experience and overwhelming success on the first two you helped him with he thinks he has the midas touch.
Money is a funny thing as someone previously stated. People who make sudden financial windfalls after having observed/worked for others who routinely make windfalls makes a person think they now are a lot smarter than everybody else. Hence, when CTC are out of control and the profits aren't there and potetial losses/liabilities are looming, it could NOT possibly be MY fault. After all look at how succesful I was on the first two houses I did by myself. The only thing that has changed in his mind is that McKibbon is now his partner...SO IT HAS TO BE MCKIBBON'S FAULT!!!!!
Not saying the above scenario is your fault...just looking at his possible perspective. Withiout knowing the contractual arrangements and delegation of responsibilities in ya'lls deal, including negative contingencies, I really can't lay blame. Did you have everything laid out on paper? Did your written contract say his fees were to be paid regardless of profits? (Here he is slinking back to the role of employee rather than neophyte businessman/developer). Is he wanting to abide by the original terms of the contract and you want to change the deal because of setbacks for mistakes made by him? Did you give him too much control for an inexperienced developer?
DISCLAIMER: The above analysis was pulled out of my left butt cheek, so proceed accordingly.
