Hocking v. Dubois
United States Court of Appeals for the Ninth Circuit
885 F.2d 1449 (9th Cir. 1989)
Hocking (plaintiff), a Nevada resident, bought a Hawaii condominium as a rental investment with the help of real estate agent Dubois (defendant), who told him a rental-pool agreement (RPA) would let all condominium owners in the resort share pooled rental income, hotel-style, regardless of whether any particular unit was rented. Hocking joined the RPA and appointed a management company as his agent, then years later defaulted on a balloon payment and sued Dubois for securities fraud under the Securities Exchange Act; the district court granted Dubois summary judgment on the theory that real estate investment isn't a security, and Hocking appealed.
Whether real estate purchased as an investment property may be considered a security under the federal securities laws.