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Nov 13, 2023

Understanding Real Estate Crowdfunding Laws and Regulations

Real Estate Crowdfunding (REC) epitomizes the fusion of traditional real estate investment with modern-day digital platforms, allowing a myriad of investors to pool their resources towards real estate ventures. However, like any financial endeavor, REC operates within a framework of laws and regulations designed to maintain transparency, protect investors, and ensure the integrity of the market. This article aims to elucidate the legal contours surrounding REC, aiding novices in navigating through the legal tapestry enshrouding this innovative investment avenue.

A Legislative Milestone: The JOBS Act

The Jumpstart Our Business Startups (JOBS Act) of 2012 marked a significant milestone in the evolution of crowdfunding in the United States. This legislative enactment relaxed certain securities regulations, paving the way for broader advertisement and promotion of crowdfunding efforts. Title III of the JOBS Act specifically laid the foundation for equity crowdfunding, allowing small investors to partake in investment opportunities traditionally reserved for accredited investors.

Understanding Securities Regulations

In the realm of REC, investments are typically structured as securities, which fall under the purview of federal securities laws. The Securities and Exchange Commission (SEC) is the primary regulatory body overseeing securities in the United States. It’s imperative for both project sponsors and investors to understand the implications of securities laws on REC ventures.

Navigating Through Registration and Exemptions

Securities offered in the United States generally require registration with the SEC. However, many REC ventures operate under certain exemptions from registration, such as those provided under Regulation D, Regulation A, and Regulation Crowdfunding. These exemptions have specific conditions and limitations, such as caps on the amount that can be raised, disclosure requirements, and investor eligibility criteria.

State Regulations: A Layered Legal Landscape

In addition to federal regulations, REC is also subject to state securities laws, often referred to as "Blue Sky Laws". These laws vary from state to state, adding a layer of complexity to the regulatory framework governing REC. Complying with both federal and state securities laws is a non-negotiable aspect of operating or investing in REC ventures.

Investor Protection Mechanisms

The regulatory framework surrounding REC is designed to protect investors. Disclosure requirements under various regulations ensure transparency, providing investors with the necessary information to make informed decisions. Additionally, platforms facilitating REC are required to adhere to certain operational standards, further safeguarding investor interests.

Compliance: A Continuous Endeavor

Compliance with the prevailing laws and regulations is not a one-off task but a continuous endeavor. Both project sponsors and investors need to stay abreast of any changes in the regulatory landscape, ensuring ongoing compliance with existing laws and adapting to new regulations as they evolve.

Seeking Legal Counsel

The complex legal landscape governing REC necessitates professional legal advice. Engaging legal counsel with expertise in securities laws and real estate regulations is advisable for both project sponsors and investors. Professional legal advice can provide clarity, ensure compliance, and mitigate potential legal risks.

Conclusion

Navigating through the legal intricacies of Real Estate Crowdfunding might initially seem like a daunting venture, but with the right guidance and resources, it transforms into an enlightening journey. Understanding the legal frameworks is not merely a regulatory requirement but a pathway to making informed and confident investment decisions.

As you step into the promising realm of Real Estate Crowdfunding, having a reliable and knowledgeable platform by your side is invaluable. Landa.app is crafted to be that reliable partner, offering a plethora of real estate investment opportunities while ensuring adherence to the legal and regulatory landscapes. Embark on your investment journey with Landa.app, where the legal framework is simplified, the investment opportunities are abundant, and your venture into Real Estate Crowdfunding is supported every step of the way.

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All Rights Reserved © Landa Holdings, Inc

Landa Holdings, Inc. ("Landa Holdings") operates the www.landa.app website (the "Site") and the Landa mobile application (the "App")(collectively, the “Platform”). Landa Holdings manages Landa App LLC, Landa App 2 LLC and Landa App 3 LLC (“Landa Issuers”), and raises funds and facilitates the issuance of shares for the Landa Issuers entities through the Platform pursuant to Regulation A under the Securities Act of 1933 (“Regulation A”).

Neither Landa Holdings nor any of its affiliates are a registered broker-dealer or investment advisor. All securities-related activity for the Landa Entities is conducted through Dalmore Group LLC (“Dalmore”), a registered broker-dealer and member of FINRA/SIPC, You can review Dalmore's brokercheck for Dalmore. Banking services are provided by Evolve Bank & Trust, Member FDIC. By opening a custody account on the Platform, you agree to Evolve Bank & Trust’s Custodial Agreement.

Further, Landa Management LLC, a wholly-owned subsidiary of Landa Holdings, manages Landa Financing LLC (“Landa Financing”), and raises funds and facilitates the issuance of shares for Landa Financing through the Platform pursuant to Regulation A. All securities-related activity for Landa Financing is conducted through Dalmore Group LLC (“Dalmore”), a registered broker-dealer and member of FINRA/SIPC (for more information on Dalmore, review Dalmore’s brokercheck for Rialto.

You should speak with your financial advisor, accountant, and/or attorney when evaluating any offering of securities. Neither Landa Holdings, Landa App, nor Dalmore makes any recommendations or provides advice about investments, and no communication, through this website or in any other medium, should be construed as a recommendation for any security offered on or off this investment platform. Nothing in this material should be construed as investment or tax advice, or a solicitation or offer, or a recommendation to buy or sell any securities. The Site and/or the App may make forward-looking statements. You should not rely on these statements but should carefully evaluate the offering materials in assessing any investment opportunity, including the complete set of risk factors that are provided as part of the offering circular for your consideration.  We urge you to review the applicable offering circular, available here.

All securities offered by the Landa Entities and Landa Financing are deemed “Shares”. Investing in Shares involves risks, and there is always the potential of losing money when you invest in Shares. Past performance is no guarantee of future results. Investments in Shares are speculative and involve substantial risks to consider before investing, outlined in the respective offering materials and including, but not limited to, illiquidity, lack of diversification, and complete loss of capital. An investment in Shares constitutes only an investment in a particular offering and not in Landa Holdings, Landa App, or any of the underlying asset(s). Investors should carefully review the risks located in the respective offering materials for a more comprehensive discussion of risks.

No money or other consideration will be solicited (and if sent, will not be accepted), and no offer to buy Shares of a particular offering can be accepted, and no part of the purchase price can be received until an offering statement filed with the Securities and Exchange Commission (the "SEC") relating to those Shares has been qualified by the SEC. Any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of acceptance given after the date of qualification by the SEC. An indication of interest involves no obligation or commitment of any kind.

Investment overviews contained on the Platform contain summaries intended for informational purposes only and are not complete. For detailed information, we urge you to refer to the applicable offering circular filed with the SEC. Neither Landa Holdings nor any of its affiliates offers refunds after an investment has been made.

You should speak with your financial advisor, accountant, and/or attorney when evaluating any Shares. None of Landa Holdings or its affiliates, Dalmore, or Rialto makes any recommendations or provides advice about Shares, and no communication, through this website or in any other medium, should be construed as a recommendation or investment advice. Nothing on the Platform should be construed as investment or tax advice, or a solicitation or offer, or a recommendation to buy or sell any securities.The Platform may make forward-looking statements. You should not rely on these statements but should carefully evaluate the offering materials in assessing any investment opportunity, including the complete set of risk factors that are provided as part of the offering circular for your consideration. We urge you to review the applicable offering circular, available here.

All Shares will be issued in electronic form only and will not be listed or quoted on any securities exchange. After a Series’ offering has concluded, we expect that the Public Private Execution Network Alternative Trading System, or PPEX ATS (the “Secondary Trading Platform”), which is registered with the SEC and operated by North Capital Private Securities Corporation (“North Capital”), will be the only venue available for the resale of Shares. Resales of Shares will be conducted by Dalmore, as a broker-dealer member of the Secondary Trading Platform; provided, however, any such resale of Shares will be subject to federal and state securities laws and the restrictions in the Series’ Operating Agreement, and there can be no assurance that an active market for any Shares will develop on the Secondary Trading Platform, that the Secondary Trading Platform will be available to allow resales of Shares to residents of all states, or that the Secondary Trading Platform will be available at all. For these reasons, investors must be prepared to hold their Shares indefinitely.


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Landa Holdings maintains this website for informational purposes only. All offerings of Series’ Shares (and information about each Series and its underlying property) are conducted exclusively on the Landa Mobile App.


All images and figures shown are for illustrative purposes only and are not actual customer or model returns. Landa is not a cryptocurrency app, all monetary values are in U.S dollars and available only to U.S. investors. All Rights Reserved © Landa Holdings, Inc.