The Notice – B&P Code §10229(a)
- The broker must file form RE 860, Multi-Lender Transaction Notice, within 30 days of their first multi lender transaction.
The Security – B&P Code §10229(c)
- The property must be located in California.
- The note by its term cannot be subject to subordination.
- The note must be secured directly by real property; collateral lending is not allowed.
The Purchasers – B&P Code §10229(e)
- Interests in the note cannot be sold to more than ten persons.
- Each purchaser must meet certain income or net worth requirements; the investment cannot exceed 10% of their net worth, exclusive of home, furnishings, and automobiles; or the investment cannot exceed 10% of AGI.
- The broker must have a signed statement from each investor confirming they meet the net worth or income requirements.
The interests – B&P Code § 10229(f)
- Each of the interests of the purchasers shall be identical in their underlying terms. There may be, however, different prices to allow for changes in the market price
Terms of Default & Foreclosure – B&P Code §10229(h)
- The documentation of the transaction shall require that (I ) a default upon any interest or note is a default upon all interests or notes, and (2) the holders of more than fifty percent of the record beneficial interests of the notes or interests may be governed by the actions to be taken on behalf of all holders in accordance with Section 2941.9of the Civil Code in the event of default or foreclosure for matters that require direction or approval of the holders, including designation of the broker, servicing agent, or other person acting on their behalf, and the sale, encumbrance, or lease of real property owned by the holders resulting from foreclosure or receipt of a deed in lieu of foreclosure.
The Servicing-B&P Code §10229(j)
- There must be a written servicing agreement. (Also See B&P Code §10233.)
- A servicing agent, broker or other exempt entity (e.g., a bank) must handle the servicing.
- The payments received on the note or notes shall be transmitted to the purchasers or lenders pro rata according to their respective interests within 25 days after receipt thereof by the agent. (Also see B&P Code §10231.1.)
The Disclosures-B&P Code § 10229(k)
- The purchasers must receive a Lender Purchaser Disclosure Statement RE 851 or RE 851B for the sale of an existing note.