Re: calif licensing

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Posted by John Behle on June 25, 2002 at 17:05:48:

In Reply to: calif licensing posted by jean on June 25, 2002 at 14:46:12:

Sometimes I wonder if some of the people out there truly don't know the laws or just choose to ignore them for the sake of sales. I think the latter.

There is some controversy as to the California law. Most believe that if you are brokering a note to an out of state institution, then the transaction does not fall under the California rules. Other out of state buyers dis-agree and some will not buy in California.

There are three issues here. One is that the laws apply to brokering or selling notes. You can buy them for your own portfolio and there is no limit.

Another issue is the limit of 7 per year. Some feel they can form different entities and be ok or sell in their spouse, children, friend's names, etc. That may be, but isn't a sure thing.

The big issue is that some of the materials from the state say that a real estate "Broker" needs to be involved in every transaction - not just an agent. But, that's the good news. Reading the law at it's strictest interpretation - A broker needs to be involved. So, you just need to find a broker, not be one. There are many brokers without enough business or even licenses just sitting unused. Structure a scenario where they are paid a small fee per transaction or per hour and you should be able to satisfy the state's requirements. That's as long as there is a simple transaction. If servicing or multiple investors per note are involved, there are other requirements.

But, that is one conservative opinion about the laws. I am not an attorney and even attornies disagree over their interpretation of this law and issue.

My philosophy is to buy notes for your own portfolio, so it is pretty much a moot point in any state. Buying notes is fine. Selling or brokering them does have some laws that apply in California and other states.

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