Many investors bought the following TICs at the recommendation of a stock broker or financial advisor. These investments are in fact securities and are subject to the same set of securities laws as any stock and bond. Many investors purchased TICs for the purported tax savings. A TIC investment is a creative way to finance a real estate transaction that results in investors acquiring significantly more real estate than they needed to accomplish their 1031 like kind exchange.
Securities Lawyer, Lars Soreide, warns investors, "One of the errors investors make in TIC cases is to assume that the unit value of the investment equals the property value divided by the units." During the litigation, "many of these cases bog down in property valuation when in reality the issue in not the property value but the investment value, which is next to worthless even if the property has residual value. Think of this way, who would buy a unit in this investment given that the purchaser would have to take on 150% on additional debt, give up all property rights to become a tenant in common that is worthless as collateral and cannot be turned into cash? Given the structure of ownership with loans with covenants signed by the sponsor and cross collateralized usually, property value is secondary in these cases."
The Financial Industry Regulatory Authority or "FINRA" which is a nationwide organization is the forum where most all of these TIC cases have to be heard because they are sold by a stock broker or financial advisor. During a FINRA arbitration, "often Respondents/Defendants put on an appraiser to prove the property value, but there is an objection on relevance of this testimony because the appraiser does not opine on the market value of the security on the notional value of the unit which is usually not much at all if anything," says Soreide. It is "critical to obtain the principal loan documents and assumption agreements to ascertain how encumbered and how much real estate you actually own."
Many of the TICs that we bring suit over have buildings that are fully operational and cash flow positive. The defense that is put on by the brokers is that the value of the property has gone up or remained the same. That is a moot point because it isn't the value of the property that matters but rather the value of the TIC security that was sold in the secondary market.
The following is a list of TIC investments that were sold by stock brokers:
ArciTerra Strategic Retail -
ArciTerra Strategic Retail - Forum Center
Bluerock Mesa Ridge apartments
Capital Square Management - Riverwood Corporate Center II
Ford Investment Properties
Inland Chicagoland Multifamily
Inland PNS Grocery DST
Inland National Net Lease Portfolio II
KBR Baron's Cove
Nelson Brothers College Terrace
PASSCO - Legends at Wolfchase
PASSCO Broad River
PASSCO Enclave at Rivergate
Principle Equity National Oilwell Varco
Rainier Exchange Portfolio I,
Rancon Medical and Educational Center
REVA - Raleigh RTP,
REVA HR RFMD DST
Salok TN, LLC
TNP 121 S. Martin Luther Blvd.
If you purchased any Tenant-In-Common or TIC investment from a stock broker or financial advisor call Soreide Law Group at (888) 760-6552 or visit http://www.securitieslawyer.com . Free consultation representing TIC investors nationwide.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.