USA: reselling a property token under Rule 144 and the one-year rule

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Kooky

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A token that stands for a share of a building in the United States can move from one digital wallet to another in seconds. Whether the holder is allowed to sell it is a separate matter, and federal securities rules answer it. An interest sold without registration with the Securities and Exchange Commission, the federal regulator, reaches its first buyer with limits on resale attached. Those limits follow the security, whatever form the record of ownership takes.

This guide covers resale only. It takes as given that the token is a security and that it was first sold under an exemption from registration, and it follows what happens afterwards: the federal rule known as Rule 144 and its holding periods, the separate one-year limit on securities sold under Regulation Crowdfunding, the restrictive legend and the transfer agent who can lift it, what the Commission's investor pages say about where trading takes place, and a proposal on transfer agents that a Commissioner described on 1 September 2026. The rule texts are quoted from the Electronic Code of Federal Regulations, which describes itself as unofficial and was up to date as of 8 October 2026 when it was read.

Electronic Code of Federal Regulations, 17 CFR 230.144(d) and 17 CFR 227.501(a), up to date as of 8 October 2026.

Why a property token usually arrives restricted

The Commission's investor page on Rule 144, published on 15 January 2013, defines restricted securities as securities acquired in unregistered, private sales from the issuing company or from an affiliate of the issuer. It lists the usual origins: private placements, Regulation D offerings, employee stock benefit plans, payment for professional services, and seed money given to a start-up.

The rule itself, at 17 CFR 230.144(a)(3), is more precise and lists eight categories. The first two matter most for property. One is securities acquired directly or indirectly from the issuer, or from an affiliate of the issuer, in a transaction or chain of transactions not involving any public offering. The other is securities acquired from the issuer that are subject to the resale limitations of Regulation D.

A sponsor that places tokens in a building with investors under Regulation D therefore hands each of them a restricted security. The Commission's page adds a point about secondary sales: a person who buys from an affiliate of the issuer takes restricted securities, even if they were not restricted in the affiliate's hands.

The same page describes a second class, control securities, which are those held by an affiliate. Rule 144 defines an affiliate as a person that directly or indirectly controls the issuer, is controlled by it, or is under common control with it. The Commission's page gives an executive officer, a director and a large shareholder as examples, and explains control as the power to direct the management and policies of the company, whether through voting securities, by contract or otherwise. Whether the sponsor or manager of a particular property vehicle is its affiliate depends on those facts.

What Rule 144 is, and what it is not

According to the preliminary note of the rule, Rule 144 is a safe harbour from the definition of an underwriter in Section 2(a)(11) of the Securities Act. A holder who meets its conditions can resell without being treated as taking part in a distribution that would need registration.

Two limits are written into the same note. The rule is not exclusive: a seller who cannot meet one of its conditions may still rely on another exemption, if one is available. And the rule is not available for a transaction that complies with its wording but forms part of a plan or scheme to evade the registration requirements of the Act.

The holding period: six months or one year

The core of the rule for an ordinary investor is paragraph (d). Restricted securities of an issuer that has been subject to the reporting requirements of the Securities Exchange Act for at least 90 days before the sale must be held for a minimum of six months. Restricted securities of any other issuer must be held for a minimum of one year. A vehicle formed to hold one building and sold privately falls in the second group unless it files reports under that Act.

The period runs from the later of two dates: the acquisition of the securities from the issuer, or their acquisition from an affiliate of the issuer. It applies to the first buyer and to every later holder.

The clock starts later than a buyer might assume. Under paragraph (d)(1)(iii), where the securities were bought, the holding period does not begin until the full purchase price or other consideration has been paid. A promissory note or an instalment contract does not count as full payment unless three things are true: the note provides for full recourse against the buyer, it is secured by collateral other than the securities bought, with a fair market value at least equal to the purchase price, and it has been paid in full before the sale of the securities.

A worked example, with assumed dates. An investor who is not an affiliate subscribes for tokens in a non-reporting property vehicle on 3 February 2025 and pays half of the price that day and the balance on 3 March 2025. The holding period starts on 3 March 2025, when the price is fully paid, and the one-year minimum is reached on 3 March 2026. Had the issuer been a reporting company for at least 90 days, the six-month minimum would have been reached on 3 September 2025.

Paragraph (d)(3) lets a holding period carry over in set cases, which lawyers call tacking; they include stock dividends and splits, conversions into other securities of the same issuer, and gifts from an affiliate. The Commission's investor page puts two points plainly: a buyer who acquires restricted securities from another non-affiliate can add that seller's holding period to their own, and for a gift from an affiliate the period began when the affiliate acquired the securities, not on the day of the gift.

The conditions that depend on who is selling

Once the holding period is met, what else applies depends on the seller. The Commission's page lists five conditions in all: the holding period, current public information, a trading volume formula, ordinary brokerage transactions, and a notice on Form 144.

For this purpose a non-affiliate is a person who is not an affiliate at the time of the sale and has not been one during the preceding three months. The affiliate rows cover more than current affiliates: paragraph (b)(2) also applies them to anyone who was an affiliate at any time during the 90 days before the sale, and to any person selling on behalf of an affiliate.

The current public information condition differs by issuer. A reporting issuer must have filed all the reports required of it during the 12 months before the sale, other than reports on Form 8-K. For a non-reporting issuer, paragraph (c)(2) requires that a specified set of information about the issuer be publicly available, by reference to a rule under the Securities Exchange Act, Rule 15c2-11. The Commission's page summarises this as information about the nature of the business, the identity of its officers and directors, and its financial statements. For the affiliate of a private property vehicle, that is a real condition: if the information is not public, the safe harbour is not available to that seller.

Volume limits and Form 144 for affiliates

An affiliate may sell only a limited quantity. Under paragraph (e)(1), the amount sold for the account of an affiliate in any three-month period may not exceed the greatest of several measures: 1 per cent of the units of the class outstanding, as shown by the issuer's most recent report or statement, or the average weekly reported trading volume during the four calendar weeks before the Form 144 notice is filed. The Commission's investor page explains that the weekly volume measure is for a class listed on a stock exchange, and that over-the-counter stocks can use only the 1 per cent measure. For debt securities, paragraph (e)(2) allows instead up to 10 per cent of the principal amount of the tranche.

A worked example, with assumed figures. A property vehicle has 2,000,000 tokens of one class outstanding, and the class is not listed on an exchange. One per cent of 2,000,000 is 20,000, so an affiliate could sell up to 20,000 tokens in any three-month period under the rule, counted together with the persons the rule treats as one seller.

The manner of sale is also set for affiliates. Paragraph (f) requires that the securities be sold in brokers' transactions, in transactions directly with a market maker, or in riskless principal transactions as the rule defines them. The seller may not solicit or arrange orders to buy, and may not make any payment in connection with the sale to anyone other than the broker or dealer who executes the order. Estates and beneficiaries that are not affiliates, and debt securities, are excepted. Paragraph (g) describes the broker's part: it does no more than execute the order as agent, receives no more than the usual and customary commission, does not solicit buy orders apart from listed exceptions, and after reasonable inquiry is not aware of circumstances showing that the seller is an underwriter or that the sale is part of a distribution. The listed exceptions include certain quotations in an inter-dealer quotation system or an alternative trading system.

Finally, the notice. Under paragraph (h), an affiliate files Form 144 with the Commission when the amount to be sold in any three-month period exceeds 5,000 shares or other units, or has an aggregate sale price above US$50,000. The form is filed at the same time as the sell order is placed with the broker or the trade is executed with a market maker, and the person filing must have a genuine intention to sell within a reasonable time. As a worked example, an affiliate who plans to sell 4,000 tokens at an assumed price of US$15 each would be selling US$60,000 of securities. The count of units is below 5,000, but the price is above US$50,000, so the notice is required.

One further paragraph concerns newly formed vehicles. Under paragraph (i), Rule 144 is not available for securities first issued by an issuer that has no or nominal operations and either no or nominal assets or assets consisting solely of cash and cash equivalents, or by an issuer that was once such a company. Access returns one year after the former shell files the information required to register a class of securities under the Exchange Act, provided it reports and is no longer a shell. The paragraph says nothing about real estate, and whether a vehicle that sells tokens before it owns a building falls within these words is a question of its own facts.

Regulation Crowdfunding: a different one-year rule

Tokens sold to the public through a crowdfunding intermediary follow a separate rule, 17 CFR 227.501. It provides that securities issued in a transaction exempt under Section 4(a)(6) of the Securities Act may not be transferred by their purchaser during the one-year period beginning when the securities were issued.

Three differences from Rule 144 stand out. The year runs from issue, not from full payment by a given holder. The limit is on any transfer by the purchaser, not only on public resale. And the rule names the transfers that remain open during the year. There are four:

1. to the issuer of the securities;
2. to an accredited investor;
3. as part of an offering registered with the Commission;
4. to a member of the family of the purchaser or the equivalent, to a trust controlled by the purchaser, to a trust created for the benefit of a member of the family or the equivalent, or in connection with the death or divorce of the purchaser or another similar circumstance.

For the second exception, paragraph (b) defines an accredited investor as any person who comes within the categories of Regulation D's definition, or who the seller reasonably believes comes within them, at the time of the sale. The seller's reasonable belief at that moment is what the rule looks at.

For the fourth, paragraph (c) lists the family: a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the purchaser, with adoptive relationships included. A spousal equivalent is a cohabitant occupying a relationship generally equivalent to that of a spouse. An uncle, a cousin or a friend is not on the list.

The section does not say what rules govern a sale after the year has run, and the list of restricted securities in Rule 144, as read for this guide, does not mention Regulation Crowdfunding. How the two rules meet is left as an open point below.

The legend and the transfer agent

Meeting the conditions of Rule 144 does not finish the matter. The Commission's investor page states that a holder who has met them still cannot sell restricted securities to the public until the legend has been removed. The legend is a statement on the certificate that the securities may not be resold in the marketplace unless they are registered with the Commission or exempt from registration. According to the page, restricted securities almost always carry one, while control securities usually do not.

The page describes who can lift it. Only a transfer agent can remove a restrictive legend, and the transfer agent will not do so unless the issuer has consented, usually in the form of an opinion letter from the issuer's counsel. Without that consent the agent has no authority to remove the legend and permit the sale. The page suggests that a holder begin by asking the issuer, or its transfer agent, about the procedure.

When issuer and holder disagree, the federal regulator stands aside. The Commission's page says the removal of a legend is a matter solely in the discretion of the issuer, that disputes about it are governed by state law and not federal law, and that the Commission will not take action in a decision or dispute about removing one. It adds that the process can be complicated and that a holder may need a lawyer who specialises in securities law. The page carries a disclaimer that it is neither a legal interpretation nor a statement of Commission policy.

The Commission's page was written about certificates. None of the pages read for this guide describes how a legend is expressed on a token, so the guide does not describe it either.

Transfer agents, their supervision and a 2026 proposal

The Commission's Division of Trading and Markets describes transfer agents as the firms that record changes of ownership, maintain the issuer's security holder records, cancel and issue certificates, and distribute dividends. Because they stand between the issuing company and the holders, the Division says, their efficient operation is critical to the successful completion of secondary trades. That page shows the date 11 October 2017 at its head and, in its footer, a last review on 28 April 2016.

Registration is the entry condition. Under Section 17A(c)(1) of the Securities Exchange Act, as the page reports it, it is unlawful for a transfer agent to perform any transfer agent function for a qualifying security unless the agent is registered with its appropriate regulatory authority. The application is made on Form TA-1 and becomes effective 30 days after the authority receives it, unless the authority accelerates, denies or postpones it. Which authority that is depends on the firm: the Comptroller of the Currency for national banks, the Federal Reserve Board for state member banks and bank holding companies, the Federal Deposit Insurance Corporation for insured banks outside the Federal Reserve System, and the Commission for all other transfer agents.

Duties continue after registration. Every transfer agent registered on 31 December files an annual report of its activities on Form TA-2 by the following 31 March. A withdrawal, on Form TA-W for agents registered with the Commission, takes effect on the 60th day after filing unless the Commission sets a shorter period. The Commission's rules for the trade, numbered in the 17Ad series, include rules on the turnaround and processing of items, recordkeeping and record retention, the safeguarding of funds and securities, signature guarantees and the search for lost security holders.

One detail on the page matters for private property tokens. It defines a qualifying security as any security registered under Section 12 of the Exchange Act. The page does not say what applies to the record keeper of a security that is not registered under Section 12, which is the position of a privately placed interest in a non-reporting vehicle. That is not settled here.

The transfer agent rules are under review. On 1 September 2026 Commissioner Hester M. Peirce published a statement titled "Time to Transfer: Statement on Proposed Transfer Agent Rules", about amendments the Commission has proposed. The statement quotes two former Commissioners who wrote in 2015 that the Commission had not significantly revised its transfer agent rules in almost 30 years. It is a Commissioner's statement about a proposal, and it speaks of finalising the rule as work still to come.

As the statement describes it, the proposal would require registered transfer agents to develop compliance policies and procedures, would require that they not improperly remove restrictive legends from shares, would require a reasonable basis for their actions, would amend Rule 17Ad-17, and would add disclosure of certain service providers to Form TA-2.

On tokens, the statement says that "many shares will be tokenized" and that the rules need to reflect how shares are now held and transferred. Among the questions it puts to the public are whether transfer agents will perform more or fewer tasks as securities move on to a blockchain, and whether the rules should allow identifiers such as email addresses and digital wallet addresses in place of names and physical addresses. The proposing release was not read for this guide.

Where a resale can be executed

On venues, the pages read for this guide give an outline and no more. The Commission's investor glossary describes alternative trading systems as electronic trading systems, regulated by the Commission, that match orders for buyers and sellers of securities. It states that an alternative trading system is not a national securities exchange, although one may apply to the Commission to become an exchange, and it notes that the Commission publishes a current list of such systems. The entry carries no date and does not mention tokens.

Rule 144 adds the role of the broker and dealer. For affiliates it names the permitted channels, as set out above: brokers' transactions, market makers and riskless principal trades. Its paragraph on brokers treats quotations in an alternative trading system as one of the settings in which a broker's activity is not counted as soliciting buy orders, subject to conditions in the rule.

What neither source supplies is a statement that a market exists for any given security. The Financial Industry Regulatory Authority defines a private placement on an undated investor page as an offering of unregistered securities to a limited pool of investors. The page says such offerings may carry fewer disclosure obligations than traditional investments, which can mean limited information for investors, and that private real estate investment trusts are not subject to the Commission's regulations that apply to public ones. The page says nothing specific about reselling a private placement.

A legal right to resell and a buyer willing to pay are two different things. The federal rules described here deal only with the first.

What the sources leave open

Six points could not be settled from the pages read.

The first is the investor bulletins. Two pages on private placements, one from the Commission and one from the Financial Industry Regulatory Authority, could not be opened during research, so this guide reports no statement from either body that is specifically about the liquidity of private placements beyond the passages cited above.

The second is venue regulation: how an alternative trading system registers and what its operator must do were not read from a primary page.

The third is the meeting point of the two one-year rules. Section 227.501 does not say what governs a transfer after its year has run, and the categories of restricted securities in Rule 144, as read, do not name crowdfunding securities.

The fourth is record keeping for securities that are not registered under Section 12 of the Exchange Act, which the Commission's transfer agent page does not address. The fifth is the proposed transfer agent rules themselves: their text, their comment period and their timetable. The sixth is state law. The Commission's page places disputes over legends under state law, and the resale rules of individual states were not researched.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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