Broker-dealers are at the forefront of an ongoing investigation into American Investment Exchange tenant-in-common investments (TICs). This is attributable to the broker-dealers' failure to conduct adequate due diligence prior to offering and selling the TIC investment to their clients. Therefore, brokers misrepresented the product as a safe and guaranteed investment, with returns ranging from 7 to 12%. The results were hefty commissions for brokers, while clients were left with unsuitable and risky real estate investments in the midst of a property bubble.
TICs are investment vehicles that allow individual investors to buy shares of real estate interests directly, rather than shares of stock, bond certificates, or other forms ownership. Properties can include a high-rise office building, a retail center, a triple-net lease from a national drugstore chain, oil or gas wells, or any other type of investment property. Investors are attracted to TICs because they can purchase an interest in expensive properties - typically $30 million or more in value. Over the past decade, TICs have become popular among retail investors. This is partially attributable to the IRS' rule amendment, which allows investors to avoid capital gains taxes by investing property sale proceeds into TICs.
Due diligence requires a reasonable investigation of all material facts before entering into an agreement or transaction with another person or entity. It is a measure taken to prevent unnecessary harm to an innocent party. In many instances, broker-dealers do not perform sufficient due diligence prior to offering products such as tenant-in-common investments. If broker-dealers do not perform their due diligence, they risk misrepresenting the true nature of the product and placing clients in an unsuitable investment. As a result, an investor can claim damages against the broker-dealer that sold the American Investment Exchange TIC for not performing its due diligence prior to the offer and sale.
Have you suffered a loss in an American Investment Exchange tenant-in-common investment? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at firstname.lastname@example.org for answers to any of your questions about this blog post and/or any related matter.