Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
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against Anderson ZurMuehlenn, alleging unlawful sale of securities, among other counts. She sought general damages of more than $4.6 million plus punitive damages. Determining that there was no common enterprise between DBSI and Redding, the Montana First Judicial District Court found that the DBSI TIC interests were not securi- ties under Montana law. Redding asked the Montana Supreme Court to review to case. T e Supreme Court said it defi nes a secu- rity quite broadly. It cited various authori- ties, such as the 1979 Montana securities case State v. Duncan. T e Supreme Court said: "…we conclude DBSI's TIC investment scheme was a com- mon venture under any measure." It cited the Howey decision and noted how the fac- tual circumstances are important, conclud- ing "… in reality DBSI sought out passive investors and that Redding, regardless of the rights she retained in the written agree- ments, was not expected to exercise any meaningful control over her investment, nor did she expect to exercise meaningful control over her investment." Anderson ZurMuehlenn argued that under Revenue Procedure 2002-22, the TICs were not securities. However, the Supreme Court of Montana made one of the strongest fi ndings in any decision on this issue: "[Anderson Zur Muehlenn], however, has not shown that in 2004 the IRS or anyone else believed that the TICs were not securities. Revenue Procedure 2002-22 simply provides guidance for TIC sponsors and owners to avoid having TICs classifi ed as partnerships. It does not say TICs are not securities." (Emphasis added.) In July, the Montana Supreme Court determined that a TIC is a security. Tell Your Clients Who You Really Are. Want to make sure your clients and potential clients know you're a CCIM? T en affi x your business card to the latest copy of Commercial Investment Real Estate magazine and leave it with them aſt er your next meeting. Or mail a copy with a personalized note. Bulk copies of CIRE are available to CCIM designees at greatly reduced prices for use in their personal marketing campaigns. 5 copies 10 copies 30 copies Current Issue $15 $25 $60 1-Year Bulk Subscription (6 Issues) $90 $150 $360 Limited quantities available, so call today to place your order. Shipping fees will be added to non-U.S. orders. Call 800-621-7027, ext. 4507. CCIM.com November | December | 2012 19 T e Supreme Court of Montana, therefore, concluded that the statement by Anderson ZurMuehlenn that the TICs were not secu- rities in 2004 is incorrect: "TICs would have been considered securities in 2004." Finally, the Supreme Court of Montana stated the foundation of its important deci- sion: "Based on the tests and principles of law discussed above, the TICs here are securities." T e Redding decision means that a TIC in this setting can be a security. T is means that there are many areas of potential lia- bility for many advisers who, as attorneys, CPAs, real estate brokers, or otherwise, have counseled their clients that the transaction was not a security. Mark Lee Levine, CCIM, JD, LLM (tax), is a professor and past director of the Burns School of Real Estate and Construction Management, Daniels College of Business, University of Den- ver. Contact him at mlevine@du.edu.