Are Condos Securities? How to Determine When You Have a Security

  • June 14, 2010
  • • Written by: Patricia S. Wall, J.D., CPA, MBA Lee Sarver, Ph.D.

Summer 2010, Vol. 35, No. 2

Abstract: Can real estate ever be a security? Can disgruntled buyers void purchases by claiming securities fraud? This article reviews case law regarding related real estate transactions and addresses what buyers and sellers should know. For example, if the real estate venture in question is a security, a purchaser can claim that the seller should have registered it as such under state or federal securities law, unless an exemption applies. If the seller did not do so, the purchaser may be able to void a now-undesirable deal by claiming securities fraud. Moreover, the person controlling the selling company and those involved in the sale may be personally liable.