December 17, 2007
December 17, 2007
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Release No. 34-56779 File No. S7-26-07 (NAR Exemptive Relief – Request for Comment)
To Whom It May Concern:
The Application of the National Association of Realtors for Exemptive Relief under Sections 15 and 36 of the Exchange Act in many respects seems positive for investors and the Tenant in Common industry. I understand that both OMNI Brokerage, Inc. and the Tenant in Common Association (TICA) are providing detailed thoughtful commentary that I urge you to consider when you determine whether or not to modify the Exemption.
In addition, to OMNI Brokerage and TICAs comments I would like to emphasize my primary concern with the Exemption. Specifically, I am concerned about the potential that Sponsors can market their properties directly to real estate brokers. I believe this can introduce a significant issue for the investing public.
Marketing properties directly to real estate agents and not first through Broker/Dealers would create a conflict of interest. The conflict is created because the Sponsors are an interested party with significant motivations to sell their product. As an OMNI Brokerage registered representative I am aware of many situations where Sponsors have attempted to release product into the market that had structural and financial defects. These defects could have ultimately impaired an investors ability to recoup their investment. From experience, I have witnessed Sponsors improve their offerings for the benefit of the investor in order to get their product to market. For example, in some cases OMNI Brokerage would not make a property available to their representatives as it was initially organized. Subsequently, the Sponsors would ultimately improve their offering.
In the alternative allowing a Sponsor to market to real estate brokers who could then discuss only the real estate component of the TIC offering with their client could create a client who is committed to a property based on only part of the information. Not having the structural analysis component presented at the same time could interfere with an investors ability to make a good decision. The structural analysis is at the very least an important area of scrutiny that Broker/Dealers provide investors. Not having this available initially could jeopardize the clients investment without the real estate agents knowledge. This has happened when client reads an advertising slick and attends a property tour and then becomes enthralled with the real estate, rather then all of the information as a whole. In most cases, by this time it is too late. It will be even more difficult to get an audience from the investor to listen to the complete dynamics of the offering when they have already sold themselves. I have witnessed this happen in the past and enabling this method would be a significant disservice to the investing public. Investors could ultimately lose an important protection that is currently being provided for them.
I thank you for your time and consideration of this commentary.
Dan Werry, JD, MBA
1031 TIC Investments, LLC
OMNI Brokerage, Inc