TIC investment fraud: how to protect against dishonest 1031 real estate deals


By Bradd Milove

TICs, or

Tenant In Common investments

, are arrangements in which two or more parties buy a stake in a particular piece of property; and since 2002, these investments have gained substantial popularity thanks to an IRS ruling qualifying TIC investors for tax deferral treatment under Section 1031 of the Internal Revenue Code. However, the growing number of individuals signing on to TIC investments has also elevated instances of real estate investment fraud – a dangerous financial liability that can leave victims with heavy economic burdens in an already troubled market. In order to prevent fraudulent investment practices, local and national advisors alike recommend that individuals review all documentation and perform frequent “legal housekeeping” to ensure appropriate disclosure and integrity in all real estate investment ventures.

According to

The Washington Post

, the complexity involved in TIC and other real estate holdings necessitates caution in order to avoid confusion – and in some cases, downright fraud. As the housing market began to show signs of decline, fraud risk escalated as more and more property owners sought to detach themselves from depreciating investments. In many cases, savvy property owners succeeded in brokering fraudulent sales in alliance with national securities firms; and now, all too many investors find themselves bound to superficially attractive but ultimately dishonest agreements.

Government regulations demand that all sellers reveal TIC investment details to the investors, and are designed to prevent the dissemination of misleading investment offering documents. But despite these regulations, falsified market condition reports, inaccurate lease terms, overblown property manager reputation reports and bogus financing promises have all managed to slip through the cracks. In the face of widespread real estate investment fraud, it is therefore important for potential victims to determine whether investment decisions were made in reliance on false or misleading investment materials.

Retired real estate investors are among the chief targets for TIC investment fraud. After years of handling the day-to-day hassles of property management – ranging from maintenance duties to rent collection and everything in between – many retirees find the prospect of outsourced management (not to mention tax deferrals and added income) particularly attractive; and because TIC investments promise all these benefits, dishonest sellers often find easy victims from amidst this specific demographic. As a result, many retirees are now at high risk for heavy losses: and while SEC and FINRA regulators have issued warnings to brokers reminding them of due diligence and full disclosure regulations under the law, the only way to guarantee fraud prevention and detection is for investors themselves to take a pro-active role – and together with an expert legal advisor, review all offering documents to root out misleading or inaccurate content before it is too late.

Experienced legal counsel can lead to safer investments and pre-emptive action against investment fraud

Individuals or parties that fall victim to

TIC investment fraud

can find themselves with serious and sometimes crippling financial consequences ranging from asset loss and tax liabilities to mortgage repayment costs; and retirees – especially those reliant upon investments for basic income – are at the greatest risk for maximum loss. In a market beset with dishonest investment practices, it is important to have a trusted legal team at your side as you fight to secure your future: and at the law offices of

Miller & Milove

, we blend years of in-depth litigation experience with a detailed understanding of real estate fraud and related claims to provide clients the best possible guidance. Find out more about TIC investment fraud and the steps you can take to stay safe today: