The North American Securities Administrators Association (NASAA) has officially approved long-awaited revisions to its Statement of Policy Regarding Real Estate Investment Trusts (the REIT Guidelines). Approved on Sept. 7, 2025, at the membership meeting in Scottsdale, Arizona, this update marks the first meaningful change to the policy since 2007. These amendments seek to enhance protections for retail investors in the non-traded REIT market by regulating sales practices, advisor conduct, and suitability thresholds.
If you or someone you know has suffered significant investment losses working with a brokerage firm, don’t hesitate to reach out to Meyer Wilson Werning today. Our lawyers are experienced in securities fraud cases and will help to guide you through the process with a free and confidential consultation to determine whether your losses are the result of actionable misconduct.
Heightened Conduct Standards for Brokers and Advisers
The updated guidelines introduce a broad definition of “Conduct Standards” that applies to anyone selling, recommending, or providing investment advice related to non-traded REIT shares. This new provision serves to codify various ongoing obligations under federal and state law.
- Applicable Regimes: The guidelines clarify that firms must comply with the U.S. Securities and Exchange Commission (SEC) Regulation Best Interest (Reg BI) , ERISA requirements, the Internal Revenue Code of 1986, and/or federal or state fiduciary duties.
- Beyond the “Floor”: Meeting the minimum eligibility requirements of the REIT Guidelines is not dispositive as to whether a broker or advisor has met the applicable standard of care. The guidelines explicitly state that firms cannot assume compliance with the policy is sufficient to fulfill their own Conduct Standards obligations.
- Sponsor Oversight: Sponsors and anyone selling shares must now make “every reasonable effort” to determine that the purchase is in compliance with applicable Conduct Standards. This introduces additional oversight obligations for sponsors, who may now be required to confirm their distribution partners are complying with Reg BI.
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10% Concentration Limits for Retail Investors
As of Jan. 1, 2026, sponsors must establish a standardized concentration limit for shareholders who are not “accredited investors”.
- The 10% Cap: Unless a state administrator determines otherwise, sponsors may no longer accept non-accredited shareholders if the investment—together with investments in other non-traded REITs, Business Development Companies (BDCs), and other non-traded direct participation programs—exceeds 10% of the person’s liquid net worth at the time of investment.
- Accredited Investor Exception: While accredited investors defined in Rule 501(a) of Regulation D are generally exempt, state regulators may still apply concentration limits to them if specific risk factors warrant it.
- Exclusions: The concentration limits do not apply to shares received through a distribution reinvestment plan.
Increased Income and Net Worth Thresholds
To account for inflation since 2007, the suitability standards for individual investors have been significantly raised to reflect modern economic realities. Under the REIT Guidelines, as amended, investors in a non-traded REIT generally need to meet one of the following criteria:
- Minimum Income and Net Worth: Both an annual gross income and a liquid net worth of at least $100,000 (an increase from the previous $70,000 threshold).
- Total Liquid Net Worth: A minimum liquid net worth of $350,000, regardless of income (increased from the previous $250,000 requirement).
Notably, these standards will now be automatically updated every five years to account for inflation. This differs from SEC regulations, which are not automatically adjusted, creating a new long-term consideration for broker-dealers and investment advisors.
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Implementation and State Adoption
While NASAA has approved these guidelines, it is not a governmental agency; it is an organization through which securities administrators in 53 U.S. jurisdictions, Canadian provinces, and Mexico coordinate efforts. Consequently, the REIT Guidelines do not automatically have the force of law.
In the coming months, individual state regulators will consider whether to adopt the amended REIT Guidelines wholesale or with variations. However, in practice, these statements of policy are often routinely incorporated in various jurisdictions and used during the coordinated review of direct participation programs.
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How Meyer Wilson Werning Helps Investors
The 2026 updates signal that regulators increasingly view non-traded REITs as complex products that require rigorous oversight. If you were sold a non-traded REIT that was unsuitable for your financial profile or if your broker failed to properly disclose the liquidity risks and fees associated with these products, you may have legal grounds for recovery.
If you or someone you know has suffered significant investment losses working with a brokerage firm, contact us today at Meyer Wilson Werning . Our attorneys are experienced in securities fraud cases and will help to guide you through the process with a free and confidential consultation to determine whether your losses are the result of actionable misconduct.
Frequently Asked Questions
What does the 10% concentration limit include?
The limit is aggregate, meaning it includes the investor’s total investment in the current REIT plus other non-traded REITs, BDCs, oil and gas programs, equipment leasing programs, and commodity pools.
How is “liquid net worth” defined under the new rules?
Liquid net worth includes assets that can be readily converted to cash, but the definition notably does not take into account leverage used on readily marketable securities, such as margin loans.
Why were these changes made now?
This is the first meaningful update in 18 years. NASAA aims to ensure suitability requirements keep pace with inflation and to reinforce the importance of responsible REIT practices and fiduciary duties from sponsors and advisors.
Can a broker be held responsible for losses if I meet the income thresholds?
Yes. Compliance with the REIT Guidelines eligibility criteria is only a “floor” and is distinct from the requisite suitability analysis that a registrant must conduct. If the recommendation was unsuitable for your specific goals, the firm may still be liable.
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