Has your use of private lenders caught the attention of the SEC?
Has your use of private lenders caught the attention of the SEC
?
Well, in creating the new SEC Compliance home study system,
I am including a section for Real Estate investors that currently have private lenders and need to know how to handle it.
So in the context of becoming in compliance with the SEC, I kiddingly refer to this situation this way.
So, it means if you already have private lenders what steps should you take to get in compliance with the SEC.
What do you do if you already have private lenders and you're over your states threshold, or you have advertised, or you paid commissions, or you have private lenders in one state and property in another? You now realize that it is important to get in compliance.
You didn't know that you needed to file paperwork with the SEC when you started finding private lender funds to buy real estate
You just didn't know the rules and you're not alone.
Well here is how it works.
Rather than having one filing, you will have two.
One filing is to put together a package of everything you have done in the past to find private lenders, with attachments and to pay a fee.
The second filing is the one that you would normally file to notify the SEC of your intent to advertise, pool money, etc. It is a look forward.
The two filings, at least in Ohio are different forms.
You will need to attach the following to the appropriate filing...
1) Your disclosure statement
2) Advertising you have used and advertising you plan on using for the go forward package.
3) Promissory notes to your look back package.
Now let me give you a HUGE time saving HINT...
The disclosure statement is critical to the SEC. They will make sure that everything that is important for the potential lender to know about your business is included in this document.
Therefore, you want to spend some time on the creation of this document. You can find a template in the SEC Compliance package.
1) When you currently have private lenders, they should get a copy of your disclosure statement, so you should see that they get a copy.
I go so far as to have them sign for it and then keep it on file to prove that they got a copy.
2) UCC1 needs to be filed. In many states you can do this online.
Finally, what if you have out of state lenders and also lenders in your state and you want to keep your exemption for in state lenders. Well an idea is to create two entities, one for all the property and lenders within your state, and a separate entity for all out of state properties and/or lenders. It might be better than having everything all rolled into one big lump when it comes to filing. When you cross state lines the federal SEC gets involved and you may need to file with them. Just a thought.
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