506(c) Marketing Rules for Real Estate Sponsors

The rule

What is general solicitation under Rule 506(c)?

General solicitation is offering securities through broad, public means to people the sponsor has no prior relationship with. Examples include ads, public web pages, social posts, mass emails and open events. Rule 502(c) bans it for most private offerings: "neither the issuer nor any person acting on its behalf shall offer or sell the securities by any form of general solicitation or general advertising."

Rule 506(c) is the exception. It lets a sponsor advertise, provided every buyer is accredited and the sponsor "shall take reasonable steps to verify" that status.

Aiming the ad at wealthy people does not change that. SEC staff put it plainly: "Rule 502(c) relates to the nature of the offering, not the nature of the offerees." The more strangers reached "through impersonal, non-selective means of communication, the more likely the communications are part of a general solicitation."

What can a Rule 506(c) sponsor advertise?

A Rule 506(c) sponsor can publish the offering itself in any medium, from the property and business plan to the minimum and target return. Every buyer must still be accredited and verified, and every statement accurate. The SEC's investor alert on advertised offerings tells investors that an offering that does not verify their status is a warning sign. The guide to 506(b) vs 506(c) for investors shows the investor's side.

Public channels

Can sponsors post a deal on social media, LinkedIn or YouTube?

Sponsors can post a deal on social media only under Rule 506(c). SEC staff Compliance and Disclosure Interpretations (C&DIs) say "the use of an unrestricted, publicly available website constitutes a general solicitation ... if the website contains an offer of securities." A public post on a social network is generally treated the same way.

What can sponsors say in public under Rule 506(b)?

Under Rule 506(b) a sponsor can publish facts about its business, but not the offering. SEC staff limit factual business information to the issuer, its business, financial condition, products and services. Staff say it "generally does not include predictions, projections, forecasts or opinions with respect to valuation of a security," or past results of a continuously offered fund.

In practice, public posts can describe what the company does and the properties it manages. Offering terms and target returns go only to people with a pre-existing, substantive relationship. For offerings run online, staff note issuers "may therefore wish to consider whether conducting the offering under Rule 506(c) would provide greater certainty."

Verifying investors

How do sponsors verify accredited investors under Rule 506(c)?

Sponsors verify accredited investors by taking reasonable steps that fit the facts. Rule 506(c)(2)(ii) lists methods that satisfy the rule. The methods are "non-exclusive and non-mandatory," and they work only if the sponsor has no knowledge that the person is not accredited. The investor side is in what investors must show to qualify.

A sponsor may mix methods in one offering (C&DI 260.39, January 23, 2026). If a verified buyer later proves not to be accredited, the offering keeps its exemption "so long as the issuer took reasonable steps to verify" (C&DI 260.06).

What did the SEC's 2025 no-action letter on minimum investments change?

The SEC's 2025 no-action letter lets a high minimum investment carry most of the verification. In a letter to Latham & Watkins dated March 12, 2025, SEC staff agreed that "a high minimum investment amount is a relevant factor in verifying accredited investor status." The accepted facts were:

• Minimums "of at least $200,000 for natural persons and at least $1,000,000 for legal entities."
• Written representations that the buyer is accredited, and that the money is not financed by a third party for this investment.
• No actual knowledge to the contrary.

Entities accredited only through their owners need $1,000,000, or $200,000 per owner if they have fewer than five natural-person owners.

A no-action letter "is not a rule, regulation, or statement of the Commission." Even so, C&DI 256.36 restates it, and C&DI 260.40 (July 21, 2026) allows the representations by digital attestation. As of October 20, 2026, the letter remains in place.

Few real estate offerings set minimums that high. In Relli's analysis of SEC Form D data, only 9.3% of 506(c) offerings use a $200,000 minimum or higher. That is 114 of the 1,220 with a usable minimum, filed October 2025 to September 2026, up from 6.7% in the year before the letter.

Claims in ads

What must 506(c) ads, decks and posts avoid saying?

A Rule 506(c) ad, deck or post must avoid any untrue statement or misleading omission of a material fact. Securities Act Section 17(a) and Rule 10b-5 apply to every offering, advertised or not. A target internal rate of return (IRR) in an ad is an offer, not factual business information, so put its assumptions and risks beside it. Regulators have pursued these patterns:

• Returns framed as high and low-risk. "High returns with little risk" heads the SEC's August 4, 2014 list of red flags.
• Spotless records. In a complaint filed July 29, 2026, the SEC alleged that RAD Diversified REIT's founders claimed "zero investors have ever lost money on their investment." The SEC alleged the company had millions in annual losses at the same time.
• A track record with the failures left out. A Texas State Securities Board emergency order of June 9, 2026 alleged that a real estate fund promoted "targeted returns of up to 20 percent." The order alleged the fund did not disclose affiliates' bankruptcies and loan defaults. Both matters are allegations.
• Paid promoters who hide the payment. Section 17(b) bars publicizing a security for pay from an issuer "without fully disclosing the receipt ... and the amount thereof." Kim Kardashian paid about $1.26 million in 2022 over an undisclosed $250,000 post (SEC press release 2022-183).
• Pressure and invented scarcity, another SEC red flag.

Can sponsors use testimonials and projected returns in 506(c) marketing?

Sponsors can use testimonials and projected returns in Rule 506(c) marketing, and the anti-fraud rules apply to all of them. Two extra rulebooks apply to some sponsors.

• SEC-registered advisers fall under the Advisers Act Marketing Rule. Testimonials need clear and prominent disclosure of client status, pay and conflicts. Gross performance needs net with "at least equal prominence." Targeted returns count as hypothetical performance, allowed only with policies and stated assumptions. The SEC fined nine advisers $850,000 in September 2023 over hypothetical performance on public websites (press release 2023-173).
• Broker-dealers distributing a deal follow Financial Industry Regulatory Authority (FINRA) Rule 2210, which requires communications to be "fair and balanced." On October 15, 2026, the SEC approved FINRA's change letting members "project performance or provide a targeted return" under written conditions. FINRA has not yet set an effective date.
• Sponsors that are neither are outside both rulebooks. Every testimonial and projection is still a statement in the offer under the anti-fraud rules.

Switching

Can a sponsor switch a 506(b) offering to 506(c), or back?

A sponsor can move a Rule 506(b) offering to 506(c) only "prior to any sales" (C&DI 260.12). After the switch, every sale must meet the Rule 506(c) conditions.

Moving from Rule 506(c) back to 506(b) works only if all sales satisfy Rule 506(b), which advertising rules out. The Form D must also be amended (C&DI 260.11). An advertised offering that fails Rule 506(c) cannot fall back on Section 4(a)(2) either: "If the issuer has engaged in general solicitation, no" (C&DI 260.13).

Advertising also follows a sponsor into its next deal. Under C&DI 148.01 (January 23, 2026), people reached through a Rule 506(c) campaign can be sold a later Rule 506(b) offering only "if the issuer established a substantive relationship with such prospective purchasers prior to the commencement of the Rule 506(b) offering."

That relationship cannot come "solely through the passage of a specific duration of time or a particular short form accreditation questionnaire." It may include "the issuer's existing or prior investors," which is one reason investor relations matter for a sponsor's next raise.

Filing

How do you file Form D for a Rule 506(c) offering?

A Rule 506(c) sponsor files Form D on the SEC's EDGAR system within 15 calendar days after the first sale, checking the Rule 506(c) box. The first sale can be the day a signed subscription agreement or check arrives. In an escrowed offering, the clock starts when "the first subscription is received into escrow." Weekend deadlines roll to the next business day, and there is no federal fee.

1. List the related persons: executive officers, directors and promoters.
2. Name everyone paid to solicit investors in Item 12, "including finders," and their commissions in Item 15. Paid solicitors are also covered by the bad actor rule.
3. File state notices, usually through the Electronic Filing Depository of the North American Securities Administrators Association (NASAA). Fees on NASAA's October 1, 2026 matrix include none in Indiana, $300 in California and $750 in New Jersey. Texas charges 0.1% of the offering, capped at $500, and some states add late fees.
4. Amend the Form D each year while the offering continues, to correct a material mistake, and after most changes.

A late filing does not void the offering by itself: filing "is not a condition to the availability of the exemption" (C&DI 257.07). For an advertised offering it is still a Regulation D violation, as Morrison Foerster read the cases. On December 20, 2024, the SEC settled with three companies that had used general solicitation and filed late, for $60,000, $195,000 and $175,000.

Sponsor FAQ

Does a 506(c) offering need a PPM, and can investors self-certify?

A Rule 506(c) offering needs no PPM under federal rules when every buyer is accredited, and a self-certification checkbox alone is not a listed verification method. The cards below cover both, plus marketplace listings and the bad actor rule.

Next, the guide to finding and keeping investors covers channels, reporting and retention. The capital raising guide covers the steps of the raise itself.