Legal Question in Real Estate Law in California

Written contracts are enforceable. That's why people use them to make deals. It wasn't a conflict of interest to you when you took his money, was it? So now that the note is due, you want to raise that claim to avoid paying him back? You can try to raise conflict and disclosure issues in the lawsuit, and let the judge decide if you acted in other than good faith. Yes, the court may find that as a broker or salesman he should not have gotten involved in this loan, and may rule that he can't collect interest on the loan, only principle repayment, and he may face problems with the DRE, but none of those issues void your repayment obligation on the principle. He is going to get his money back. The court will not let you unjustly enrich yourself by your conduct.

I agree that whether or not the broker violated any ethical or professional rules, you'll be held liable to repay (assuming the loan is otherwise enforceable).