Legal Question in Business Law in California

Re: Finder's Fee/Legality/California

In a narrow sense, an individual may receive a finder's fee for locating capital.

However, the bare fact that X and Y can enter into a contract for a finder's fee for locating capital does not sanitize or leaglize everything that a person acting as a finder might do. For example,

(1) Participating in the solicitation, issuance or distribution of securities (broadly defined to include investment opportunities of any stripe) is a tightly regulated activity;

(2) Offering financial advice may require a license or registration;

(3) Going beyond the role of a finder and participating in negotiations between the provider of the funds and the acceptor of the funds might require a license before a fee or commission could be paid; in particular, it might require a real estate broker license.

(4) There may be other aspects of the proposed transaction that come under licensing or other provisions of law that don't come to mind due to the absence of particulars in your question.

So, in conclusion, if you are the party being asked to pay a finder's fee, I'd say if you agreed to pay one and the finder has performed, you're probably required to pay up. Conversely, if you are the finder, I'd think that your agreement for a fee can be enforced unless other facts show that you've overstepped the somewhat narrow bounds of finderhood and have gone into a licensed are such as business brokering, securities sales, investment advising, etc.