you to disclose information to your potential private lenders, which is for your benefit as well as your private lenders' benefit.
You'll pay a fee to your state regulator when you file your paperwork.
One of the things I've taught my students and continue to stress is that you shouldn't be pooling money from private lenders unless you make sure you're in compliance.
In order to be in compliance with your home state's securities laws, you'll need to find the proper exemption, filing or registration option and comply with its requirements.
The following is some general information on staying in compliance with your state's requirements.
When you use an exemption to bring in private lenders, you are making an offer and sale of a security. It's important to understand that an offer to sell is usually treated the same as a sale when it comes to securities compliance.
Two key concepts to understand when you sell securities are that there are exempt securities and there are exempt transactions. Whether you're selling stock, equities, borrowing money, or debt, these are treated as securities. An exempt security usually means a security issued by a governmental agency or authority.
An exempt transaction refers to the sale of a security not issued by a government agency that has been given an exemption under state law (or federal law) because of the nature of the security and how it's sold.
Many of my students are basing their compliance on the exemptions in their states that are similar to the one in Ohio found under 3(H):
Ohio Revised Code, Chapter XVII, Title 1707.03(H) The sale of notes, bonds, or other evidences of indebtedness that are secured by a mortgage lien upon real estate, leasehold estate other than oil, gas, or mining leasehold, or tangible personal property, or which evidence of indebtedness is due under or based upon a conditional-sale contract, if all such notes, bonds, or other evidences of indebtedness are sold to a single purchaser at a single sale, is exempt.
Remember, these are still securities, and the sale of these securities can be exempt under securities laws in Ohio. Compliance with the offer and sale of these securities is still required.
Some states may offer you more than one choice, so you'll want to evaluate those choices
Alan Cowgill is a national speaker, author, and real estate entrepreneur. Alan had bought or sold over 200 investment properties. His step-by-step system "Private Lending Made Easy" teaches Real Estate investors and mortgage brokers how to find private lenders. Contact Alan at 937-390-0816 or 866-831-3540. For a FREE audio CD go to www.PrivateLendingMadeEasy.com
Here are some more estate planning articles...
