All Forum Posts by: Drew Shirley

What about a front page on the website that says 'Texas investors only' and requires the user to acknowledge Texas residency before accessing any information relating to the offering?

Edit: according to this law firm's article, the webpage will pass muster if it checks the visitor's IP address to confirm it is within the offering state AND a disclaimer that the offer is limited to residents of that state. Or you could have an opt-in where the visitor confirms intrastate residency.

If you're buying and selling packages of notes, partials, etc., you start to sound like a securities trader or dealer, and that is definitely something that could run afoul of the SEC or the state securities board. 

But borrowing money from investors to buy a property and securing the notes with a deed of trust--that's an exempt transaction, the way I read it.

Of course, *** this is not legal advice and I am not your lawyer. ***

*** This is not legal advice and I am not your lawyer. ***

My reading of the Texas Securities Act is that IF

(1) all your investors are from Texas AND

(2) you are issuing debt and not equity (i.e., borrowing money instead of selling pieces of your company)

You are exempt from both the federal and state securities laws, which means you can advertise and issue the debt to multiple lenders or even a pool fund.

So you can offer them a note secured by a mortgage in the property(ies) you buy. 

Offering equity gets into the murky waters of securities registration, but if all the investors are Texans, you can offer equity to up to 35 friends and family investors (no solicitation allowed) or an unlimited number of accredited investors (solicitation allowed).

Then again, check back next week because things may have changed.

This is an excerpt from Section 5 of the Texas Securities Act: 

*****

So in Texas, if you're selling any securities and you don't advertise, you can sell them to up to 35 investors. If they're all from Texas too, you avoid federal registration too.

If you're selling complete notes/deeds of trust (not partials) and they're all secured at once in a single transaction, then that transaction is exempt from securities regs AND you can advertise AND there's no limit on the number or type of investors. And if they're all from Texas, you avoid federal registration too.

Hi Mary, congratulations.

I must admit most of the residential leases I see do not have specific "fireplace clauses" in them. 

What issue are you trying to address or avoid?

Just tell your attorney you want him to act as the buyer's agent--he can get with the seller's agent and see about amending the listing agreement. It's not commonplace to do this but the seller's agent shouldn't have any problem with it.

A thinly capitalized LLC is unlikely to be a major target for lawsuits because why sue if there's no deep pockets? Similarly, if an LLC owns only one asset -- let's say a rental house -- and it's worth $300K but there's a $290,000 mortgage on it, then that LLC is also not a likely lawsuit target.

@Samuel Turner The main purpose of the LLC is liability protection. Think of the LLC as a separate, legal person, because that's exactly what it is. If it owns the property instead of you personally, then the liabilities for the property are limited to the assets of the LLC, rather than all of your personal assets.

This may not matter when you're broke and just starting out, but as soon as you can, you want to put your real estate assets in an LLC (preferably each one in a different series of a series LLC) and don't sign or guarantee any note or other legal obligation personally.

 No!

In my opinion, it is not possible for an agent to represent both parties to a real estate transaction equally, particularly if the agent is only being paid by one of the parties! Massive conflict of interest. I would never advise my clients to accept an intermediary relationship like that.