Texas Securities Commission (private lending)

[Kyle Moore]

Hi guys,

We are looking at private lending as a possibility for funding some investments.

I have E. Alan Cowgill, "Private Lending Made Easy," which as others have pointed out in other threads, encourages the investor to hit up his family and friends for money. This is what we do NOT want to do. We won't do it.

If we still want to pursue private lending through individuals, we have to advertise to strangers, and in order to do that legally, we must register with the Texas Securities Commission.

I'm guessing that this is going to involve some time with a good attorney, but before jumping in I thought I would tap into the wisdom of the people on this forum.

TWO QUESTIONS:
1. Has anyone here gone through the hoops of registering with the securities commission? If not in Texas, another state? Was it worthwhile?
2. Does anyone know of a good Houston-area attorney who can guide us through this process?

[Don Konipol]

Securities laws are probably the most misunderstand aspect of real estate investing. Not only do you have Federal laws, rules and regulations, exemptions and safe harbors, but also 50 different state laws! In other words it is not a subject that has a cut and dry answer - only someone experienced in these laws can render a opinion as to what constitutes a violation or what is not in violation.

Now, having said that, I will direct you to Sec 5J of the Texas Securities Act

Sec. 5. Exempt Transactions
J. Wherein the securities disposed of consist exclusively of notes or bonds secured by mortgage or vendor's lien upon real estate or tangible personal property, and the entire mortgage is sold or transferred with all of the notes or bonds secured thereby in a single transaction.

Seems to indicate that mortgages when sold to a single entity in it's entirety is exempt from securities regulation in Texas.

My attorney is Nelson Hensley of Hensley & Krueger, 24 Greenway Plaza, Suite 1305, Houston Texas 77046.

I have had two successful private offerings raising about
$20 million.