Tenant-In-Common Investments (TICs)
Tenant-in-common (TIC) investments were once an enticing option for investors. They generally involve property that is co-owned as an investment by multiple individuals. Typically, an investor would seek to sell an existing piece of real estate and then enter into a TIC in order to take advantage of tax benefits. However, the period following the initial surge of these investments proved to be detrimental for those who participated in them. The real estate market downturn resulted in falling property values, and investors found it nearly impossible to exit a TIC. Meanwhile, many people began questioning their brokers’ advice to make these investments in the first place. The knowledgeable securities fraud lawyers at Fitapelli Kurta are renowned for our skill and experience in representing individuals in New York and throughout the United States who have been harmed by broker malfeasance. Adept in both state and federal securities law, we have investigated and tried countless claims of misrepresentation, including many related to TIC investments.Risks May Outweigh Rewards in TIC Investments
There once were strong reasons why TIC investments might suit an individual’s goals. In 2002, an IRS ruling allowed investors to defer capital gains in cases where there was a “like-kind” exchange of properties, as opposed to a traditional sale or disposition. As a result, professionals in the area recognized the tax benefits of structuring pooled investments as an option for clients selling existing property. Since these properties are managed by a third party, the arrangements gave investors diminished management responsibilities. In addition, TIC investments were touted as supposedly low-risk opportunities with moderate returns.
On the other hand, the possible downsides of these programs have proved to be significant. The most significant problem has been their correlation to the real estate market. Another issue with some of the earlier TICs was the failure of the sponsor to conduct due diligence on the deal before and during the investment period. Sponsors may include brokerage firms, real estate companies, or even entrepreneurs who are responsible for finding real estate, acquiring it, and then making it available for investors. Part of that process includes making financial projections for the property and conducting due diligence. The sponsor then provides that information to brokers, who sell shares of the real estate to their clients as part of an investment strategy.Protect Your Rights Against Brokers Violating SEC Guidelines
One of the most common problems with TICs has been the lack of due diligence performed by investment professionals when evaluating the properties involved. A broker’s failure to adequately review financial statements, the qualifications and experience of the sponsor, and the quality of the property can result in tremendous harm to the investor.
Fortunately, TICs are typically considered securities. It is important to realize that there are certain standards that brokers must meet when dealing with these types of investments. Guidelines produced by the Securities and Exchange Commission (SEC) require them to deal fairly, recommend suitable investments, seek the most favorable terms for clients, and disclose certain information. There is always the possibility that a broker may not have fully looked into whether an opportunity was suitable for a certain client’s broader goals. It is also important to realize that these professionals whom you hope to trust are capable of earning relatively high commissions on TIC investments, which can be a huge incentive to advise individuals to sign up. If you have invested in a TIC, but are unsure whether your broker fulfilled his or her duty of due diligence, speak with a knowledgeable attorney without delay.Discuss Your Stock Fraud Case with an Investment Fraud Lawyer
If you have invested in a TIC and suspect your broker may not have acted with your best interests in mind, you may have a legal claim. Based in New York, the diligent stock fraud attorneys at Fitapelli Kurta can evaluate your claim, guide you through the process, and help you attempt to recover your lost investments. Call (877) 238-4175 or contact us online to speak to one of our knowledgeable professionals at no cost to you.