Legal Question in Real Estate Law in California

Re: Business Compensation

As a cautious lawyer, I am reluctant to offer an opinion on the legality of a professional-services business that may be treading a fine line between needing one (or more) of several license types. In addition to the real estate licensing and broker affiliation rules that you are familiar with, licensing or some kind of professional credential may be needed for giving financial advice or for arranging loans. Financial advisors are regulated by federal law and the arranging of certain kinds of loans is covered by the California Financial Code.

Let me give you an example of a possible problem. You are consulting for a recent high-tech startup that has a great product but needs a few hundred thousand for patents and prototype development. You find them a rich guy who's willing to back them, but after due diligence is done and a week before the deal is supposed to close, the investor decides he needs the corporate directors to secure the loan with personal guarantees and second deeds of trust on their houses. Your clients agree, and the deal closes.

In the hypothetical, have you broken the law by arranging a loan collateralized by real property? Maybe. Probably.

On the other hand, if you are working for a corporate client as an hourly paid consultant, and you do not actually arrange any loans secured by real estate, and there are no consumer issues involved, I cannot think of any laws that you would obviously violate.

I urge that you consult with your own attorney who would be in a position to quiz you on the specifics of what you will be doing.