Contact us with your California corporate & securities law questions (949) 353-6347 or Contact us here

California's Secured Promissory Note Exemption

The line between real property transactions and securities transactions is not always clear.  California Corporations Code Section 25100(p) provides an exemption for a promissory note secured by a lien on real property provided it is neither: (a) one of a series of notes of equal priority secured by interests in the same real property; or (b) a note in which beneficial interests are sold to more than one person or entity.  However, the fact that a secured note may be exempt under Section 25100(p) will only take you so far.

In Stromberg v. Harder, 2015 U.S. Dist. LEXIS 142584 (N.D. Cal. Oct. 20, 2015), the defendant in my view went too far by arguing that Section 25100 "exempts 'real property investments' from classification as 'securities' that require a permit".  The exemption found in Section 25100(p) exempts a secured promissory note from the requirement that its offer and sale in this state must be qualified under Section 25110, 25120 or 25130.  Section 25100(p), however, is not an exemption from the antifraud provisions of the Corporate Securities Law.

It should be noted, however, that despite the fact that Section 25018 defines "security" to include, among other things, "any note", California courts have not always found that notes are securities under the California Corporate Securities Law.  See Marsh & Volk, Practice Under the California Securities Law § 5.19[3] (note to readers: I serve as Practice Editor to this treatise).

[updated 10/28/2015]

Share on:

ANY QUESTIONS REGARDING CALIFORNIA CORPORATE AND SECURITIES LAW? CONTACT US DIRECTLY

We offer expert advice with the intricacies of California law.

Our years of experience and expertise allow us to help clients navigate the business laws in California.

CONTACT US

Get the latest news and analysis about California Corporate & Securities law. Subscribe to our newsletter today!

We respect your email privacy

ABOUT OUR AUTHOR

30172DBAB0084D3A8F39D7AF0A8E79BC.ashx Keith Paul Bishop
Partner at Allen Matkins
(949) 353-6328
 Contact me
Learn More About Keith

RECOGNITION

NationalLawReview

badge-author-large

nominee-badge

Get the latest news and analysis about California Corporate & Securities law. Subscribe to our newsletter today!

We respect your email privacy

CATEGORIES

see all

YOUTUBE

FACEBOOK