Real estate syndications

Real Estate Regulation

In New York, Article 23-A of the New York General Business Law (GBL), commonly referred to as the Martin Act, gives the Attorney General the authority to enforce the law's provisions, which regulate the offer and sale of securities in or from New York. In the 1960s, the New York Real Estate Syndication Act (Syndication Act) was added to the Martin Act, reaffirming existing authority that the solicitation and sale of participation interests or investments in real estate ventures are considered “securities” within the purview of the Martin Act.

A real estate syndicate is a group of investors who collaborate with one another and pool their funds to purchase or develop real property. The process begins with at least one person who wants to invest in a real estate venture and who seeks to approach or solicit investors to pool their money together for the investment; this initial person or group would be known as the issuer. Before the issuer of the security can approach or solicit prospective investors, however, the issuer must be registered as a dealer and an “offering statement” or a “prospectus” must be filed with and accepted by the Real Estate Finance (REF) Bureau of the New York State Office of the Attorney General. The offering statement must disclose all material information related to the offering. Only after REF has accepted the offering statement and the issuer has been properly registered would the issuer be permitted to make public offerings to prospective investors.

New York Syndication Act offering plan regulations

Exemption from New York Syndication Act registration requirements

The Syndication Act does not require submission of a full offering plan in all cases. Policy Statements 100 through 105 provide guidance regarding the exemptions available to issuers who would otherwise be required to register their offering statements or prospectuses.

Policy Statement 100
Policy Statement 100 provides an exemption application under GBL sections 352-g(2) and 359-f(2) for real estate syndication offerings made pursuant to Rules 504 and 505 of Regulation D under the Securities Act of 1933.

Policy Statement 101
Policy Statement 101 provides an exemption application under GBL sections 352-g(1) and 359-f(2) for real estate syndication offerings made to persons not exceeding 40 in number.

Policy Statement 102
Policy Statement 102 provides an exemption application under GBL sections 352-g(2) and 359-g(2) for real estate syndication offerings registered with the Securities and Exchange Commission (SEC) under the Securities Act of 1933.

Policy Statement 103
Policy Statement 103 provides an exemption application under GBL sections 359-f(1)(a) and 359-g(2) for real estate offerings by certain governmental issuers.

Policy Statement 104
Policy Statement 104 provides an exemption application from the filing requirements of GBL section 352-e for certain offerings that fall within the statutory subcategories of GBL section 359-f(2).

Policy Statement 105
Policy Statement 105 provides instructions for issuers of real estate syndication offerings requesting no-filing letters from REF. Granting the no-filing letter is based purely on the discretion of REF in determining that the offering may not be “to the public” and not within the purview of the Martin Act.

Notification filing (Form 99)
Form 99 is a notification filing for issuers who are filing or have filed with the SEC under one of the following conditions: 

  • pursuant to Rule 506 of Regulation D
  • pursuant to Regulation A, Tier 2
  • as a "qualified purchaser" as defined by the Securities Act of 1933 section 18(b)(3)

Memoranda concerning syndication issues

Real estate syndication offerings that include rights to acquire condominium units (6/19/2013)

  • This memorandum provides guidance for syndication offerings in which offerees are afforded the right to acquire a condominium unit in the development as part of the syndication offering. These transactions include offerings of two distinct types of securities: (1) an interest in a real estate "syndication" (participation of interest in the entity that acquires and develops the property); and (2) cooperative interest in realty, a condominium unit. Because these transactions involve offerings of two distinct types of securities, they require two separate filings with REF.
  • As a matter of policy, the Department of Law will not grant a “no action” letter in lieu of filing an offering plan for sales of condominium units related to syndication offerings.

Filing requirements with the Department of Law pursuant to SEC Regulation A+ (6/6/2015)

  • SEC's Regulation A+ became effective on June 19, 2015. This memorandum provides the filing requirements for REF and options available for Regulation A+ issuers.