Legal Question in Real Estate Law in California

Of course, or hire a broker to manage it and 'hang his license'.

Your description of your venture is not entirely clear, but I would disagree with Mr. Nelson. It does not sound like you plan to advise or represent other people in the acquisition, sale or leasing of real estate. It sounds like you plan an investment company instead. In that case, you would not need a real estate license, but you would need various securities licenses. Or, employees with the necessary licensing and authority.

If you were going to acquire commercial property for yourself, I would say no. But you are not clear on who you want to "acquire" for.

Business & Professions Code section 10131 defines a wide variety of activities that require a broker's license under California law. You can find a copy of the relevant section here: http://codes.lp.findlaw.com/cacode/BPC/1/d4/1/3/1/s10131

It requires a license if you are going to sell or offer to sell, buy or offer to buy, solicit prospective sellers and purchasers, or solicit or btain listing of, or negotiate the purchase, sale or exchange of real property or a business opportunity. (Bus. & Prof. Code, section 10131 subd. (a).) There are many other activities that require a broker's license, as defined in that statute.

Further, "It is unlawful for any person to act as a real property securities dealer in this state without first having obtained a real estate broker's license." (Bus. & Prof. Code, sect. 10237.3.) The securities transactions contemplated by that statute are those "in any interest in any general or limited partnership, joint venture, unincorporated association, or similar organization owned beneficially by more than 100 persons and formed for the sole purpose of, and engaged solely in, investment in or gain from an interest in real property, including, but not limited to, a sale, exchange, trade or development." (Corp. Code, sect. 25206.)

The only exception is one who acts as a finder. Those who act strictly in the capacity of a finder need not hold a broker's or a salesperson's license. A "finder" is someone who simply introduces the parties but does not negotiate terms or engage in any other transactional activity. (Tyrone v. Kelley (1973) 9 Cal.3d 1, 8.)

It is illegal for anyone to "engage in the business, act in the capacity of, advertise or assume to act" as a real estate broker or a real estate salesperson in the State of California without first obtaining a real estate license from the Department of Real Estate (DRE.) (Bus. & Prof. Code, sect. 10130.)

The penalties can be severe. A person acting in the capacity of a real estate broker without a license cannot recover compensation in a court of law for acts that require a license. (Bus. & Prof. Code, sect. 10136.) People violating the state licensing laws can be enjoined by the DRE. (Bus. & Prof. Code, sect. 10086.) Further, acting as a real estate broker or salesperson without a license is a public offense, punishable by a maximum $10,000 fine and /or up to six (6) months' imprisonmcnt. (Bus. & Prof. Code, sect. 10139.)

You should also be aware that having a real estate broker's or salesperson's license does not authorize you to give legal advice, unless you are also a licensed attorney.

I can see advantages to having a broker in or affiliated with the new firm. First, if you are going to be handling acquisitions, you'd be unable to participate lawfully in som many aspects of the transaction that it'd be a big handicap and slow things down. You'd always be tap-dancing around what you could and could not do for the client, and at some point or another a client is sure to be unhappy with the results of a transaction and be looking for grounds to sue you. Finally, having your own broker license would lend stature and credibility to the firm.

I'd suggest looking up the Business and Professions Code and reviewing the laws defining a real estate broker and activities requiring a license beginning with B&P section 10130.

The real estate broker's license also allows a certain level of activity in making real-estate based loans - but not selling investment securities, of course.