Why non-traded REITs keep showing up in senior accounts
Non-traded REITs promise high yields and stable income. They also carry high commissions, illiquidity, and valuation opacity. In May 2026, FINRA issued multiple disciplinary actions against broker-dealers and registered representatives who pushed these products onto retirees without proper disclosure.
The pattern is familiar. A broker tells a 70-year-old investor that a non-traded REIT is “like a bond but better.” The product pays an 8 percent distribution. The investor signs the paperwork. Two years later, redemptions freeze, the distribution gets cut, and the NAV drops 30 percent.
FINRA’s May 2026 actions include censures and fines against firms that recommended non-traded REITs and interval funds to clients with moderate or conservative risk profiles. Individual reps have been barred or suspended. Restitution orders range from $25,000 to over $1 million per case.
What makes non-traded REITs dangerous for older investors
The first risk is liquidity. Unlike publicly traded REITs, non-traded REITs do not list on an exchange. You cannot sell them on the open market. Sponsors may offer quarterly redemption programs, but those programs can be suspended at any time.
The second risk is valuation. Non-traded REITs set their own net asset values. Those valuations may lag market conditions by quarters or years. An investor who sees a stable share price on a statement may believe the investment is safe when the underlying real estate has already deteriorated.
The third risk is fees. Upfront commissions can reach 10 percent or more. There are also acquisition fees, asset-management fees, and performance fees. When an investment must overcome a 10 to 15 percent fee drag before it delivers a positive return, the math becomes difficult.
Red flags every retiree should recognize
Be cautious if a broker uses the phrase “safe income” to describe any product that is not a Treasury bond, money market fund, or insured CD. Be cautious if the recommendation concentrates more than 10 percent of your liquid assets in a single non-traded vehicle. Be cautious if the broker discourages you from getting a second opinion.
FINRA requires brokers to perform a reasonable-basis suitability analysis before recommending non-traded REITs. That means the product itself must be suitable for at least some investors, and the specific recommendation must match your goals, age, liquidity needs, and risk tolerance. When brokers skip those steps, they violate their duty to you.
We have seen cases where brokers sold non-traded REITs to clients in their eighties who needed the money for medical expenses within two years. That is not suitability. That is exploitation.
Haselkorn & Thibaut fights for investor recovery
Haselkorn & Thibaut is a national law firm dedicated to helping investors recover losses from brokerage firms, financial advisors, and public companies. The firm was founded by former Wall Street defense attorneys who saw how the system protected institutions over individual retirees. Their track record includes a 98 percent success rate, more than 95 years of combined experience, and over $520 million recovered for clients. Haselkorn & Thibaut holds an AV Preeminent rating from Martindale-Hubbell.
If your broker recommended a non-traded REIT without explaining the liquidity risk, or if the investment now sits frozen in your account, you may be entitled to damages through FINRA arbitration. Our consultations are free and confidential.
Contact Haselkorn & Thibaut today
Call 1-888-885-7162 for a free consultation. You can also visit htattorneys.com to submit your case online. There is no fee unless we recover funds for you.
Disclaimer: This article is for informational purposes only and does not constitute legal or investment advice. Past results do not guarantee future outcomes.
