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Starting March 1st — your way of doing business could change drastically!
If you borrow money from a private lender and offer equity participation, that is now considered a a business opportunity
See the new rules our “fundamentally changing everything” President came up with for Business Opportunity rules
http://www.internetmarketinglawcenter.com/ftc-bizopprule.pdf
This is horrifying and DANGEROUS to every business. Thanks for keeping us informed.
I sure love how the Federal government is looking out for small businesses. All mom & pop businesses like most of us will need an attorney and CPA on full time staff if this group of criminals in DC aren’t sent packing soon. I really like the requirement where the disclosure MUST include listing allegations (not convictions) too.
How’s that CHANGE thing working for you?
I would send you the link to the FTC web site so you can see more horrendous details, but their site got hacked in to on February 17th and it’s still now up… so no only do you have to COMPLY with this new law in march 1st… you can’t read it.
I guess it’s kind of like obamacare you have to pass the bill to learn what’s in it.
Did your attorney indicate that this applies to loans only? Or all equity participation strategies?
What does this do to performance leases? What about purchasing with owner financing with an equity participation or performance clause?
What if the private money partner purchases the home, and we take back an option and lease?
Frustrating to not be able to read the regulations and get the information myself.
Looks like some grey areas.
If the money person is a lender, it could be argued that this doesn’t apply. The jest of this looks like a situation where one is putting money up with the expectation of making money down the road that may or may not happen. A mortgage clearly is not the case. And an option could be argued same.
I could argue if an investor got a money person to put up the money and promised him half of the upside on a rehab/flip, there could be some issues.
Now, is one solicits money for mortgages or anything, they may be under other FTC rules, so one has to be careful.
Also, if one has good established money people that understand, and you take care of them, there will not be an issue no matter what you do.
Thoughts?
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