Ch. 17 - Real Estate Syndicates and Real Estate Investment Trusts

Marita tells Alexandria they must obtain their broker-dealer license from the Department of Corporations to engage in the sale of Real Estate syndicate of security interests. Alexandria disagrees with Marita, explaining they both have their broker license and that should be sufficient. Who is correct and why? (A) Marita is correct. Section 15632 was added to the Real Estate Syndicate Act requiring real estate brokers to obtain a broker-dealer license. (B) Alexandria is correct. Section 25206 was added to the Corporation Code making obtaining a broker-dealer license optional. (C) Marita is correct. Section 25206 has an added provision dealing with brokers violating the Corporations Code and requiring the broker-dealer license (D) None of the above

(B) Alexandria is correct. Section 25206 was added to the Corporation Code making obtaining a broker-dealer license optional.

Alexandria and Marita's has qualified as a trust. It has distributed 96% of it income to its shareholders. Which earnings requires the payment of federal taxes? (A) The company only pays federal taxes on the retained earnings (B) The company only pays federal taxes on the retained earnings, which are taxed at corporate rates (C) The company only pays federal taxes on the distribution to its shareholders (D) The company is exempt from federal taxes due to its trust qualification. It is required to pay state and local taxes

(B) The company only pays federal taxes on the retained earnings, which are taxed at corporate rates

This is the most frequently used organization form of Real Estate syndicates. Which form firms the description? (A) The General Partnership or Joint Partnership (B) The Corporate Form (C) The Limited Partnership (D) The Combination

(C) The Limited Partnership

This form of syndication avoids double taxation but has a lack of centralized management. Which form fits the description? (A) The corporate (B) The General Partnership (C) The Joint Venture (D) Both B & C

Both (B) and (C) The General Partnership and The Joint Venture

A small group of investors are in the initial stages of putting together a real estate investment trust (REIT). Which of the following are qualifications? (A) A REIT must be beneficially owned by 100 investors (B) The Company must distribute 85% or more of its income to its shareholders (C) Each share of certificate of interest must carry with it an equivalent vote (D) No five, or fewer person may hold more than 50% of the beneficial interest

(B) The Company must distribute 85% or more of its income to its shareholders

Alexandria and Marita have formed an 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 Alexandria and Marita formed? (A) An Equity Trust (B) A Mortgage Trust (C) A Combination Trust (D) A Joint Venture Trust

(C) A Combination Trust

Alexandria and Marita are forming a Real Estate syndicate. They have their initial investments and are ready to proceed. What happens next? (A) Operation, Origination, Completion or Liquidation (B) Syndication, General Partnership, REIT (C) Origination, Operation, Completion or Liquidation (D) Origination, Exemption, Corporation

(C) Origination, Operation, Completion or Liquidation

This form of syndication allows limited liability for the investors but has negative tax features. Which form fits the description? (A) The General Partnership (B) The Joint Venture (C) The Limited Liability Company (D) The Corporate Form

(D) The Corporate Form

Marita and Alexandria set up a Limited Partnership. Marita is named General Partner and Alexandria is named Limited Partner. Marita embezzles funds from the investors. Is Alexandria liable for Marita's indiscretion? (A) Alexandria is only liable if she was named General Partner in the certificate or if she participates in control of the business (B) Alexandria is as liable to the investors as Marita. However, unless she was involved in the crime, she is only financially liable (C) Alexandria is liable as a partner whether it is General Partner or Limited Partner (D) Both B and C

(A) Alexandria is only liable if she was named General Partner in the certificate or if she participates in control of the business

What is the correct order of regulatory jurisdiction changes to non-corporate California Real Estate syndicate since the Real Estate Syndicate Acts inception in 1970? (A) The Department of Corporations, The California Department of Real Estate, The Department of Corporations (B) The California Department of Real Estate, The Department of Corporations, Real Estate Commissioner (C) Real Estate Commissioner, The California Department of Real Estate, The Department of Corrections (D) Real Estate Commissioner, The California Department of Real Estate, The Department of Corporations

(A) The Department of Corporations, The California Department of Real Estate, The Department of Corporations