The Ninth Circuit appeals court's recent decision establishing a blueprint for marketing and selling condo-hotel units without violating securities laws has some condo developers and their lawyers expressing concerns. The decision found that the San Diego Hard Rock hotel's condominium sales failed to amount to securities deals.

Developers remain worried about their ability to legally market condo-hotel units without registering them as securities. But some are considering admitting their products are securities and using provisions of the 2012 JOBS Act to comply with SEC regulations.

Ballard Spahr partner Christopher W. Payne told Law360, “The biggest business and legal issue is and has always been sales ... and when the sales team has restrictions on how to sell, either through the framework that is left in place following the Hard Rock decision or through a new framework with the JOBS Act, that just makes their job harder.”

“The benefits of avoiding a securities claim are substantial, but agreeing that your product is a security also widens the potential number of claims,” said Mr. Payne, who has significant experience handling condo-hotel projects and consulted on Hard Rock, though partner Thomas W. McNamara led the litigation.