Real Estate Investment Fraud
What Every Investor Should Know
Be aware that investment opportunities in real estate can trick unwary investors into buying into unregistered securities or worse yet—scams.
Your interest in a real estate investment opportunity may begin with a trusted family member, friend, neighbor or business associate who approaches you to talk about some impressive financial gains. An advertisement in a popular newspaper or online service catches your eye with a promise of guaranteed returns secured by an interest in a piece of real estate.
Whether a real estate investment is a security or not is not always easy to determine and depends upon the unique facts and circumstances of the transaction and not on what a promoter calls the investment product.
A general rule of thumb with which to start is that if you as the investor are not in control of the real estate transaction and are expecting a return on your money, the transaction probably involves a security. Because the investment may involve a chunk of your life savings, consider consulting with an attorney knowledgeable in securities law to provide a legal interpretation for you and evaluate any exemptions claimed by the promoter.