By Gary K Landry
One of the most important components of any TIC investment is the TIC: attorney opinion letter. Most PPMs of securitized TICs will, or at least should, include the TIC: attorney opinion letter, and so it is something that all investors and potential investors should be aware and understanding of.
What it is
The TIC: attorney opinion letter is used in particular situations. Occasionally, TIC interests are treated as real estate rather than as securities, and in this situation a TIC: attorney opinion letter can be used.
Sponsors here obtain legal opinions from their own law firms, stating that the TIC interests they are selling are interests in real estate, rather than securities. The client can then use this opinion and rely on it, and can even seek to obtain damages from the party that gave the opinion if any of it proves to be false or if the opinion turns out to be incorrect in some way.
TIC promoters and investors in TICs should exercise all the caution and prudence that they can, in order to best protect themselves and also to ensure that the entire process goes through as smoothly as possible.
There are many ways that one can do this, one being that if the Master Lease arrangement should be used to avoid the prohibition on the use of a single name.
In this and similar cases, a TIC: attorney opinion letter should be obtained in order to negate any possible tax penalties.
Pros and Cons
In general, it is important to be aware of the pros and cons of something before going through with it, and the same rule applies to the TIC financing option. There are a lot of different factors that one should consider when purchasing a TIC.
Whether there have been any evictions on the property they are considering, how long the current TIC partners have been in place, and how many units are in the building, for instance, are all relevant and very important to take into consideration here.
Although they do hold many benefits, TICs are also quite risky, and are subject to changes in legislation that could offer a negative blow at any point.
Because of this it is important for anyone even just considering investing in a TIC to make themselves more educated and to speak to a professional in this area so they can get help in deciding whether this is going to be a smart financial move for them or not.
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