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Does George Babbitt Need a Broker-Dealer License (Part II)?

Last week, I discussed the real estate broker exemption from broker-dealer licensing requirements in California Corporations Code § 25206.  Commissioner's Release 62-C provides additional clarifying comments regarding this exemption.

The Commissioner of Corporations has also adopted a rule that provides an additional exemption for real estate brokers licensed by the California Real Estate Commissioner. Rule 260.204.1 exempts real estate brokers whose business as a broker-dealer, in addition to any transactions within Section 25206 of the Code, is limited to any or all of the following:

  • Transactions involving all of the outstanding securities of an existing business if the transactions have been negotiated as transactions for the purchase or sale of real estate or substantially all of the assets of the existing business, or both, but excluding those transactions involving a merger, consolidation, or other reorganization; or
  • Transactions in the shares or memberships of mutual water companies in connection with a sale of an interest in real property; or
  • Transactions in investment contracts sold or offered for sale with, or as part of, residential condominium units or time share uses or estates, if the sale of such investment contracts has been qualified pursuant to Chapter 2, (commencing with Section 25110), Part 2, Division 1, Title 4 of the Code; or
  • Transactions in a series of notes secured by interests in the same real property, or in undivided interests in a note secured by real property, pursuant to a qualification under Section 25110, Section 25120 or Section 25130 of the Code or pursuant to the exemption contained in Section 25102(e), Section 25102(i) or Section 25102.5, other than an offering which is made pursuant to a registration under the Securities Act of 1933 or a Regulation A exemption under that act (17 CFR 230.231 et seq.).

As noted in the prior post, a California exemption doesn't exempt a real estate broker from licensing as a broker under the Securities Exchange Act of 1934 or any other state's broker-dealer licensing requirement.

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30172DBAB0084D3A8F39D7AF0A8E79BC.ashx Keith Paul Bishop
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