Syndication Law & The Private Placement Memorandum Attorney Securities Licenses and Real Estate Licenses for Reg D Syndications
Syndicators engaging in fund creation or syndication do not require a real estate or securities license. While securities licensing poses challenges, selling securities does not necessitate a license. Regulation D allows sponsors to sell securities without involving a broker dealer. However, possessing a securities license entails ensuring suitability for individual investors, which can be problematic if the sponsor lacks knowledge of specific circumstances. To avoid issues, sponsors must clarify their role as a sponsor and not a registered investment advisor or broker dealer. Separating these roles is challenging, as investors may still rely on their information based on their previous status. Hence, a securities license can be more complex than not having one at all.
In contrast, a real estate license offers advantages in real estate syndication. While not mandatory, having a real estate license enables syndicators to earn fees from transactions. Proper disclosure should be made, emphasizing that the syndicator acts as an agent or broker, and others may have negotiated different prices. This prevents future disputes over missed opportunities. Personally, I recommend syndicators involved in real estate syndication to obtain a real estate license. It increases earnings and allows for competent handling of real estate transactions within the syndication. With a license, syndicators gain expertise in the market, facilitating effective buying, selling, and management of real estate.
Read more about Reg D Structure - How should you structure your Reg D syndication offering?: https://www.moschettilaw.com/reg-d-syndication-structure/
Read more about Real Estate Fund Structures - Real Estate Syndication Fund Structures: https://www.moschettilaw.com/real-estate-syndication-fund-structures/
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