Posted by Garrett Sutton on February 16, 2004 at 12:08:47:
Drew: Without reading the entire act, as your local attorney should do, two points become clear. First, the supposed benefits of this act do not apply to interstate transactions, that is offerings to those outside of Texas. Second, you mention selling notes in your business instead of shares. The exception you are citing applies to very limited real estate, not business, transactions. You can be sure the state of Texas will not take kindly to what amounts to, in both form and substance, a sale of securities. Be very careful in this area and seek good local counsel. Garrett
Advertising for private RE investors - Posted by Drew-TX
Posted by Drew-TX on February 13, 2004 at 16:23:20:
Saw the thread on the main group where some believed advertising for private investors may be an illegal solicitation of unregistered securities.
Well… check your state’s “blue sky laws,” but in Texas, it appears that real estate notes are exempted from securities laws:
Art. 581-5. Exempt Transactions
Except as hereinafter in this Act specifically provided, the provisions of this Act shall not apply to the sale of any security when made in any of the following transactions and under any of the following conditions, and the company or person engaged therein shall not be deemed a dealer within the meaning of this Act; that is to say, the provisions of this Act shall not apply to any sale, offer for sale, solicitation, subscription, dealing in or delivery of any security under any of the following transactions or conditions:
[…]
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.
So, if you don’t advertise or sell shares in your business, but rather advertise and sell the notes themselves, it looks like you’re all right… at least in Texas. At least, that’s how I read it.