Legal Memorandum: Sale of Real Property in CA

Issue: Under California law, may a general partner of a limited liability partnership receive a commission from the sale of real property owned by the partnership without possessing a real estate broker’s license.

The following authorities are instructive:

Cal. Bus. & Prof. Code § 10130 (establishing when a real estate broker license is required);

Cal. Bus. & Prof. Code § 10131 (defining who acts as a real estate broker);

Cal. Bus. & Prof. Code § 10133 (“A . . . general partner of a partnership with respect to real property owned or leased by the . . . partnership, . . . or in connection with the proposed purchase or leasing of real property by the . . . partnership, . . .  if the acts are not performed by the . . . partner in expectation of special compensation” is excluded from the real estate license requirement.);

Park Terrace Ltd. v. Teasdale, 100 Cal. App. 4^th 802 (Ct. App. 4^th Dist. 2002);

Stickel v. Harris, 196 Cal. App. 3d 575 (Ct. App. 1^st Dist. 1987);

Broffman v. Newman, 213 Cal. App. 3d 252 (Ct. App. 2d Dist. 1989);

Froid v. Fox, 132 Cal. App. 3d 832 (Ct. App. 1^st Dist. 1982).

The “special compensation” language used in Cal. Bus. & Prof. Code § 10133 is more commonly found throughout the country in states’ securities laws.  See, e.g., Cal. Corp. Code § 25009.  In that context, the following authorities offer some guidance of its meaning:

S.C. Code § 35-1-102 cmt. 17 (“[This clause] amounts to a recognition that brokers and dealers commonly give a certain amount of advice to their customers in the course of their regular business, and that it would be inappropriate to bring them within the scope of the Investment Advisers Act merely because […]