The TIC industry is entering into its eleventh year and expectations are high that growth in this industry will be appreciable because investor confidence is growing all across the board and volumes of transactions too are rapidly increasing and more and more new sponsors are also entering the market. In fact, it is believed that from the end of the year 2001 till the end of the previous year the deals struck accounted for as much as, it is believed, 3.7 billion dollars.

Thus, becoming a TIC Securities Broker/Dealer is surely going to prove to be a paying proposition. The fact of the matter is that many TIC sponsors are also choosing to structure their TIC investments as securities and though they may be regulated by SEC as well as by NASD, it throws open the doors for many more TIC securities Broker/dealers to earn hefty commissions from brokering or affecting such transactions.

Many Challenges To Confront

Since 1031 TIC exchanges are most often handled by TIC securities Broker/dealers under the Securities and Exchange Commission’s oversight, there are many challenges that the TIC securities Broker/dealers have to confront including not involving real estate professionals who only help in buying and selling real estate. Still, to protect one from the pitfalls of securities investments an investor dealing with TIC securities Broker/dealers must consider a few things.

One of the more important aspects that you will need to consider when dealing with TIC securities Broker/dealers is to learn about the percentage of business that the broker does with regard to TIC interests in the form of securities, and to be on the safe side, you should ensure that the TIC securities Broker/dealers are in fact mainly dealing with TIC exchanges in the form of securities and which must form the core of all their business dealings and which is not a side business for them.

Also, according to law courts in the US, an investment is deemed to be a security if the money earned by way of profits from investments comes through efforts made by others. So, if you are planning to use TIC securities Broker/dealers for your TIC exchange transactions, it is necessary that you first of all apply what is known as the Howey test to ensure that you don’t end up selling through a real estate broker, even though the temptation to do so is high given the fact that real estate TIC interests have lower fees as compared to when selling securities.

Your best bet with regard to dealing with TIC securities Broker/dealers is to follow the National Association of Securities Dealers’ notice that reviews the rules regarding broker-dealers when selling your TIC shares.

Kathryn R. Landry is a business writer for TIC Advisors, Inc. A company that can give you the most complete information on a 1031 exchange or TIC property ownership.