Syndication

Securities law for real estate syndication

A syndication is a securities offering that happens to own a building. The 1933 Act, Regulation D, the accredited investor standard, and the verification rules that decide whether your raise is legal.

A syndication is a securities offering that happens to own a building. Everything a sponsor thinks of as the deal, the property, the business plan, the returns, sits downstream of a question most sponsors never ask out loud: under what exemption are we allowed to sell this at all. There is no version of a real estate syndication that escapes federal securities law. There is only the version that complies and the version that has not been caught yet.

The exemption you rely on is a status tested in hindsight, and you only ever need it once you are already in trouble.

That is the thing to understand before any of the mechanics. Registering a securities offering with the SEC is so expensive and slow that essentially no syndication does it. Every deal instead relies on an exemption from registration, almost always Regulation D, Rule 506. An exemption is not a form you file and forget. It is a set of conditions you either met or did not, and whether you met them gets litigated after a deal sours, when an investor who lost money hires a lawyer to find the crack. The sponsor who papered the offering carelessly finds out years later that the exemption they assumed they had was never valid, and that an invalid exemption can mean every investor is owed their money back.

The choices in this section are load-bearing and mostly one-way. Whether you may advertise the deal, who you may take money from, how you prove they qualified, what you file and when: each is decided before the first dollar moves, and several cannot be undone once you have started marketing.

The articles below build the regime from the ground up, starting with why the interest you are selling is a security in the first place.

Inside this hub

You are selling a security, whatever you call it

The Howey test decides what counts as a security, and the label you put on the deal does not. Why passivity is the trigger, and why you cannot draft your way out of securities law by making investors passive.

Regulation D: the exemption every syndication runs on

Registering a securities offering costs more than most syndications are worth, so nearly every deal relies on Regulation D Rule 506. What the exemption is, what it preempts, and why you build the file to prove it before you ever need to.

506(b) vs 506(c): the one-way door

The difference between the two Regulation D lanes is whether you can advertise, and choosing wrong can destroy the exemption with no fallback. What each lane demands, and how a 2025 SEC letter changed the trade-off.

Accredited investors: why wealthy is not the test

The 501(a) accredited investor standard, unchanged in 2026 and still unindexed, and the higher qualified-client bar that decides whether you can even charge a promote. The distinction most sponsors miss.

Verifying accredited status: his word is not enough

Under 506(c) you must take reasonable steps to verify every investor, and self-certification is not one of them. The traditional methods, the 2025 high-minimum path, and why mixing verification with self-certification busts the deal.

The bad actor and the offering you didn't know you were running

One disqualified person in your deal can strip the Rule 506 exemption for the entire raise, and two offerings you think are separate can be collapsed into one. Two invisible compliance obligations no form makes you do.

Form D and the states you also have to answer to

Filing with the SEC is not the end of your filing obligations. Every state where an investor lives may want its own notice and fee, the deadline runs from your first sale, and the obligation is keyed to where your investors are, not where you are.

Who is allowed to be paid to raise your money

Pay someone a cut of the money they bring in and you may have hired an unregistered broker, which can hand every investor they touched a rescission right. There is still no federal finder exemption, and transaction-based pay is the bright line.

When your syndication becomes a fund: the 100-investor wall

The 100-investor cap that scares sponsors often does not apply to a single-building deal at all. It applies the moment your vehicle holds securities instead of real estate, which is the line between a deal and a fund.

When running the deal makes you an investment adviser

Charge a promote for managing a fund and you may be an investment adviser, subject to a body of law separate from the offering rules you already navigated. The exemptions syndicators use, and the sweeping rules a court just struck down.

The innocent sentence that becomes securities fraud

The statement that sinks a sponsor is usually not in the PPM. It is in an email, a webinar answer, a text. Anti-fraud liability attaches to what you said across every channel, and a careful PPM does not cure a reckless conversation.

Marketing the raise without a securities disaster

The same post that fills your raise can bust your exemption or trigger fraud liability. Every public communication faces two gates: does your exemption even permit solicitation, and does the content survive anti-fraud.

The exemption from registration is not an exemption from fraud

Every private placement, however perfectly papered, is fully exposed to the anti-fraud rules. Because anti-fraud reaches omissions and survives every exemption, robust risk disclosure is the sponsor's best defense, not a sales liability.

Beyond 506: the other exemptions and the ERISA wall

Rule 506 is the highway, but the edges solve problems it cannot: reaching non-accredited crowds, raising offshore, and the ERISA line that can turn a sponsor who takes too much retirement money into a plan fiduciary.

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