Purchasers cannot attach securities fraud to deed transferors

By Jay Fishman, J.D. The North Carolina Court of Appeals affirmed North Carolina Business Court orders absolving two defendant real estate companies of securities fraud in connection with their transferring to the plaintiff purchasers a deed for tenancy in common interests (TICs) in five parcels of real property that the companies previously sold to a real property developer (NNN Durham Office Portfolio 1, LLC v. Highwoods Realty Limited Partnership, September 4, 2018, Tyson, J.). The basic facts are as follows: In 2006, the two companies entered into an exclusive listing agreement to sell the five parcels on which sat two medical facility tenants. A confidential offering memorandum (COM) was drafted to contain percentages predicting the probability that the tenants would renew their leases after expiration. In 2007, the companies sold the parcels to the developer who prepared a private placement memorandum (PPM) for investors interested in purchasing the TICs. The…

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