Using Private Money On Real Estate Is Considered A Security

What is a security?

What is a security?

The term "security" is broadly defined to mean "any certificate or instrument, or any oral, written, or electronic agreement, understanding, or opportunity, that represents title to or interest in, or is secured by any lien or charge upon the capital, assets, profits, property or credit of any person or of any public or governmental body, subdivision or agency."

That's the language used on the website of the Ohio Division of Securities. This definition includes such common items as shares of stock, warrants and options, , membership interests in limited liability companies, bonds and debentures. Limited partnership interests are considered to be securities, while general partnership interests are generally not considered to be securities. The statutory definition additionally includes the term "investment contract," which has been construed by court decisions to include numerous investment opportunities and business opportunities, which at first glance may not appear to fit within the definition of "security."

Does that mean private lending may be considered securities?

When you are borrowing money from private lenders, you are offering them a security. You're making an IOU to them, by borrowing their money and promising to pay them a fixed interest rate over a certain time period or when the sale of a property is concluded.

When a company sells shares or stock, it's giving the purchaser of the securities an ownership interest. Shareholders make their money when they get dividends on their investment or when they sell their stock. Private lenders are lending you funds and they make their money by receiving the interest rate you've promised them.

Ohio and most other states allow securities to be offered to investors when they are either registered or offered under a proper exemption from registration. Securities laws do define debt as a type of security. This means that your business has the same kind of opportunities as businesses that sell shares of their company to the public. It also means that securities laws and regulations apply to the business.

Who regulates securities?

Each state regulates investments offered to its citizens. The federal government, through the Securities & Exchange Commission (SEC), regulates offerings across state lines. This means that you'll have to look at the laws and regulations in your state when you're only working with private lenders in your state. If you're working with folks across state lines, you'll need to comply with the laws in each state you're working in and comply with the SEC's rules too.

by: Alan Cowgill

POST COMMENT

Cost Is Not An Issue When Knowing The Benefit From Stain Resistant Carpet Bedroom furniture is mirror image of the owner Purchasing Repossessed Homes: When Would Be The Best Time To Do It? Unlock Wii-Learn How To Unlock Wii – Homebrew Installer Cholesterol Lipitor (atorvastatin) Generic Rosuvastatin Online, Order Cheap Crestor, Cholesterol Gemfibrozil Online, Lopid, Cholesterol Aspiring Home Stagers Battle "Same Old, Same Old" Mevacor Is Used For Lowering High Cholesterol In Certain Patients Painting Contractors Why Doesnt Their Paintwork Last Any More? Prime 4 Causes Why Frameless Glass Shower Doors Are Selected Fenofibrate Online, Tricor, Cholesterol Cholesterol Ezetimibe (zetia)