Blue Sky Laws

Blue sky laws are federal securities regulations that are designed to protect investors from highly risky investments and nefarious practices by people who sell investments. Blue sky laws are not meant to keep people from investing in highly risky ventures. Instead, they are simply there to ensure that the people who sell these investments inform their investors of all of the associated risks. The idea is to elicit all of the information out of the people who sell those investments. From there, investors can make their own determinations on whether the risks are worth it. In the residential real estate world, these laws typically do not come into play. Most homes placed on the market do not rise to the level of "risky" as defined by state and federal law. These laws are much more relevant for people who are in the business of buying and selling commercial real estate.