S.E.C. Real Estate Observer

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CCIM Institute forms 1031 Tenants in Common (TIC) Transactions Work Group

Editor’s note: In the 1960’s, several members of the Society of Exchange Counselors were instrumental in the creation of the CCIM organization. Today, many S.E.C members also hold the prestigious CCIM designation and are active members nationwide. The information below was provided by the CCIM Institute and is republished with appropriate credit to its source.

The CCIM Institute is participating in the National Association of Realtors Tenants in Common (TIC) working group, in an effort to provide clarity for those in the TIC industry who are caught between two sets of laws and regulations — those that pertain to securities and those that pertain to real estate.

The goals of the TIC work group are to provide clarity regarding when TIC interests must be brokered as a real estate transaction and when it must be brokered as a security and to provide clarity on the extent and nature of real estate licensee participation in the sale of TIC interests that constitute securities. The second goal will be met by working with the appropriate regulators to offer guidance on how real estate licensees perform services and how they should be compensated for the marketing and sale of real estate.

At this time, the TIC work group is maintaining dialogue with the National Association of Securities Dealers (NASD) and the Securities Exchange Commission (SEC). The NASD is expected to issue guidance to its members on TICs some time in January and the TIC work group is encouraging the NASD to allow a registered broker/dealer to join with a real estate licensee in a TIC transaction. The SEC is currently in the process of evaluating a “no action” request submitted by a NAR member firm. This “no action” letter requests support of a fee-splitting arrangement between broker/dealers and real estate licensees in TIC transactions.

The CCIM Institute will continue to update members on the evolution of this important issue. If you have comments, suggestions or information regarding this issue, please contact Cheré LaRose-Senne at clarose@cciminstitute.com or at (312) 329-6033.