Legal Question in Real Estate Law in Colorado
Real eastate Investment
I invested $55,000 in a real estate deal with Chelsea Sun LLC about 6 years ago. The deal was basically to invest in some developed property, subdivision, in Colorado and build 60 townhouses. Investors were to be paid on a phased approach as more homes were built. (20, 40 and full payment at 60 homes). There are other investors but was never provided their names as was stated in operating agreement. The investment has paid nothing out. The biggest problem I have is that as an investor I don't think I have been dealt with appropriately. IE - no statuses as mentioned in operating agreement, I have to ask multiple times each year just to get a K-1 statement. I am of the understanding that the builder of the homes is now being sued which I only found out indirectly rather than by any formal status reporting. I guess I am just looking to understand if I have any legal recourse in this matter.
1 Answer from Attorneys
Re: Real estate Investment
Afternoon,
It really depends on the operating agreement and the form of the investment. If this was a straight operating agreement and you are a full voting member with other rights, then you may have a claim for breach of fiduciary duty in addition to other contract claims.
Additionally, this investment, depending on structure, may be deemed to be an offering of securities. Often these types of offers provide you with a private placement memorandum and fall under one of the exemptions to registration (such as Reg D Rule 506). Again, depending on the exact form of this offering it may be a securities offering regardless if they provided the appropriate disclosures and information.
If it is a securities offering and they failed to follow the appropriate procedures, you could proceed against them to get your money back in addition to other damages.
I would strongly advise that you contact a Colorado business attorney to review the matter. I would be happy to assist if you have any questions. Good luck.
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