TIC's as Real Estate - law passed in Utah
| | Thursday, September 08, 2005 @ 10:00 AM EDT
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Contributed by: Joel Hinckley
Joel Hinckley Properties
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(April 22, 2005) -- The Utah state legislature has approved a bill supported by the Utah Association of REALTORS®, which specifies that tenant-in-common transactions are real estate deals, even though they may be offered as securities.
Real estate practitioners sought the law because regulators at both the state and federal level concluded that tenant-in-common, or TIC, transactions involve the sale of a security—and therefore require real estate practitioners to have both a real estate and securities license, says Christopher Kyler, UAR's executive officer.
The new statute allows TICs to be sold as real estate under state law, although they may be treated as securities under federal law. Practitioners can receive commissions and referral fees for TICs.
State Sen. Al Mansell, who also is the 2005 president of the NATIONAL ASSOCIATION OF REALTORS®, introduced the bill.
Purchase of properties sold as TICs is a trend nationwide. The property is sold to a number of often-unrelated buyers—usually real estate investors involved in a tax-deferred exchange—who receive an undivided, fractionalized interest in the property.
Kyler says the new law “is the first of its kind that we’re aware of,” and may serve as a national model.
The legislation was one of three major real estate bills favored by the Utah Association of REALTORS®. Gov. Jon Huntsman has signed all three into law; they become effective July 1.
Mansell also introduced a measure that spells out a minimum standard of service for practitioners in an exclusive agency relationship. The law requires brokers to present offers, prepare counteroffers, and answer any questions throughout the process—whether they’re on the buyer or seller side of the transaction.
Another law limits the ability of revenue-seeking cities to impose a business license fee on brokers and salespeople. Under the new statute, only a broker with a “bricks-and-mortar” site within the city is subject to a business fee. Neither individual licensees in the broker’s office nor outsiders involved in a transaction within the city limits can be tapped for a business license payment.
—By Corrie M. Anders for REALTOR® Magazine Online
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