Your broker may have described a non-traded REIT as safe, income-producing real estate. In reality, many investors cannot sell their shares, distributions have been cut, and upfront fees consumed a large share of every dollar invested. Haselkorn & Thibaut, P.A., operating as Investment Fraud Lawyers, helps investors recover losses from REIT fraud and mis-selling.
Our partners bring 95+ years of combined securities law experience to every matter. We maintain an approximately 98% success rate. We have been involved in more than $520 million of securities cases. We are ranked in the top 2% of peer-reviewed firms.
We handle most investor claims on a contingency basis — you pay no attorney’s fee unless we recover money for you.
What is REIT fraud?
REIT fraud occurs when a broker or advisor misrepresents, omits material facts about, or recommends an unsuitable real estate investment trust. Most claims involve non-traded REITs, which are not listed on public exchanges and carry specific risks that brokers frequently downplay.
A REIT is a company that owns or finances income-producing real estate. Publicly traded REITs can be bought and sold on exchanges. Non-traded REITs cannot.
They promise steady income. They often lack liquidity and charge high upfront fees. Their valuations may not reflect the true market value of the underlying properties.
| Feature | Publicly traded REIT | Non-traded REIT |
|---|---|---|
| Liquidity | Sold on exchanges during market hours | Limited or no redemption program; often locked in for years |
| Upfront fees | Generally low, like a stock | Commissions and fees can total 10% or more |
| Valuation | Market price set by public trading | Valuation set by sponsor; may be inflated |
| Distributions | Dividends from rental income or capital gains | May be paid from capital or debt, not operating income |
| Disclosure | Extensive Securities and Exchange Commission (SEC) reporting and audited financials | Less frequent disclosure; valuations may not be independent |
Signs you may be a victim of REIT fraud
Non-traded REITs are systematically mis-sold to investors who need liquidity, safety, or diversification. The warning signs are usually visible once you know what to look for.
| Warning sign | What to check | Why it matters |
|---|---|---|
| No public market | Redemption program limits or suspensions | You may not access capital when needed |
| Large write-downs | Current valuation vs. original purchase price | Suggests inflated initial valuation |
| Distribution cuts | Source of past distributions | Income may have been paid from capital, not rent |
| High upfront costs | Offering documents for commissions and fees | Fees reduce every dollar invested by 10% or more |
How we build your REIT fraud case
We investigate the specific REIT, the sales process, and the brokerage firm’s due diligence to determine whether the recommendation was suitable and fully disclosed.
- REIT analysis: We review offering documents, financial statements, distribution history, and any regulatory actions against the sponsor.
- Suitability review: We compare the REIT’s illiquidity, concentration, and fee structure to your investment profile and time horizon.
- Disclosure failures: We document what the broker emphasized, such as income and safety, and what was omitted about illiquidity and fees.
What you can recover
| Recovery item | Description |
|---|---|
| Decline in share value | The difference between what you paid and the REIT’s current value |
| Excess fees and commissions | Upfront costs and ongoing fees that were not properly disclosed |
| Lost opportunity | The return you would have earned in a suitable, liquid investment |
| Distribution losses | Income that was cut or was paid from your own capital |
| Tax harm | Unintended tax consequences from the unsuitable REIT |
Why choose our firm
We have handled non-traded REIT claims involving major sponsors and brokerage firms. Our former Wall Street defense background helps us anticipate the defenses firms raise and counter them with evidence of unsuitability and inadequate disclosure.
Related practice areas
See our related resources on types of misconduct, REIT fraud lawyer, private placement fraud, Financial Industry Regulatory Authority (FINRA) arbitration, and failure to supervise.
When a REIT fraud claim becomes urgent
Non-traded REITs often suspend redemptions, stop distributions, or restate valuations long before investors realize the extent of the problem. Delay can mean missing a FINRA filing deadline, losing a place in a bankruptcy distribution, or watching the sponsor transfer assets. We recommend reviewing your account as soon as you notice limited liquidity, distribution cuts, or valuation write-downs.
What makes non-traded REITs especially risky for retirees
Retirees are often told that non-traded REITs produce reliable income. What they are not told is that the distributions may come from borrowed money or return of capital.
The share value can also be written down years before any public disclosure. When a retiree cannot access the principal, the loss is both financial and practical.
Frequently asked questions
Are all non-traded REITs fraudulent?
No. Some non-traded REITs are legitimate real estate investments. However, they are often mis-sold because brokers fail to disclose illiquidity, high fees, and valuation risks.
Can I recover if my REIT has not lost value yet?
Possibly. Non-traded REIT valuations are often set by the sponsor and may not reflect market value. If the REIT was unsuitable or misrepresented, you may still have a claim even if the stated value has not dropped.
How long do I have to file a REIT fraud claim?
FINRA arbitration claims generally must be filed within six years of the events giving rise to the dispute. State statutes may be shorter, so act promptly.
Can I sell my non-traded REIT shares?
In most cases, there is no practical market. Some REITs offer limited redemption programs, but they are often at a discount to the stated value and may be suspended.
What if the broker who sold me the REIT no longer works at the firm?
The brokerage firm that sold the REIT is generally liable for the conduct of its brokers, even after they leave. Your claim is against the firm.
Do I have to pay upfront to hire your firm?
No. We handle most cases on a contingency basis. You pay no attorney’s fee unless we recover money for you. Call 1-888-885-7162 for a free case review.
This page is for informational purposes only and does not constitute legal advice. Past results do not guarantee future outcomes.