Chapter 17

Alexandra and Marita are forming a real estate syndicate. They have their initial investments and are ready to proceed. What happens next?

Origination, Operation, Completion or Liquidation

Marita and Alexandra set up a Limited Partnership. Marita is named General Partner and Alexandra is named Limited Partner. Marita embezzles funds from the investors. Is Alexandra liable for Marita's indiscretion?

Alexandra is only liable if she is named as a general partner in the certificate or if she participates in control of the business.

This form of syndication avoids double taxation but has a lack of centralized management. Which form fits the description?

The corporate form

Alexandra and Marita have formed a REIT. They have their investors and resources and are ready for business. The REIT will be investing in an assorted portfolio of real estate and mortgage investments. What type of REIT have Alexandra and Marita formed?

A Combination Trust

This form of syndication allows limited liability for the investors but has negative tax features. Which form fits the description?

The Corporate Form

This is the most frequently used organizational form for real estate syndicates. Which form fits the description?

The Limited Partnership

Marita tells Alexandra they must obtain their broker-dealer license from the Department of Corporations to engage in the sale of real estate syndicate security interests. Alexandra disagrees with Marita, explaining they both have their broker licenses and that is sufficient. Who is correct and why?

Alexandra is correct. Section 25206 was added to the Corporations Code making obtaining a broker-dealer license optional

Alexandra and Marita's company has qualified as a trust. It has distributed 96% of its income to its shareholders. Which earnings require the payment of federal taxes?

T he company only pays federal taxes on the retained earnings, which are taxed at corporate rates

What is the correct order of regulatory agency jurisdiction changes to non-corporate California real estate syndicates since The Real Estate Syndicate Act's inception in 1970?

The Department of Corporations, The California Bureau of Real Estate, The Department of Corporations

A small group of investors are in the initial stages of putting together a real estate investment trust (REIT). Which of the following is not a qualification?

The company must distribute at least 85% or more of its income to its shareholders