California Blue Sky Laws for Syndication

Navigating the complexities of raising capital through private placements requires a thorough understanding of both federal and state securities laws. In the United States, the Securities and Exchange Commission (SEC) regulates the offering of securities under federal laws, while individual states have their own set of regulations known as Blue Sky Laws. For those involved in syndication, particularly real estate syndication, comprehending these laws is crucial for ensuring compliance and successfully raising funds.

California, with its robust economy and dynamic real estate market, has specific Blue Sky Laws that issuers must consider. These laws, designed to protect investors from fraudulent activities, require careful attention to detail and precise adherence to both state and federal regulations. This article provides a comprehensive guide to California’s Blue Sky Laws, their relationship with SEC Regulation D, and the specific procedures for claiming exemptions under these laws.

We will explore why choosing Regulation D Rule 506(b) or Rule 506(c) can offer significant advantages over state-specific Blue Sky Laws, the notification rules for state filings, and the exemptions available under California law. Additionally, we’ll discuss whether you need a California-licensed attorney to assist with your offerings and the implications of having an out-of-state attorney review your purchase contracts.

By the end of this article, you will have a clearer understanding of how to navigate California’s Blue Sky Laws, leverage federal exemptions for efficient capital raising, and ensure compliance with all relevant legal requirements. Whether you are a real estate developer, private equity fund manager, or a business professional involved in syndication, this guide will equip you with the knowledge needed to move forward confidently in the California market.

How do a State’s Blue Sky Laws Relate to the SEC’s Regulation D?

When raising capital through private placements, understanding the relationship between state Blue Sky Laws and the SEC’s Regulation D is crucial for compliance and successful fundraising. Regulation D, specifically Rules 506(b) and 506(c), provides a federal framework that preempts state Blue Sky Laws, simplifying the regulatory landscape for issuers. However, state laws still play a significant role in the notification and compliance process.

Federal Preemption Under Regulation D

Under 15 U.S. Code § 77r(b)(4)(F), offerings made pursuant to Regulation D, Rule 506(b), or Rule 506(c) are exempt from state securities registration requirements. This federal preemption means that issuers do not need to register their securities offerings with each state individually, significantly reducing the administrative burden and cost associated with multi-state offerings. Instead, compliance with the federal Regulation D requirements is sufficient, provided that issuers also fulfill state-specific notification requirements.

Rule 506(b):

• Allows issuers to raise an unlimited amount of capital.
• Permits sales to an unlimited number of accredited investors and up to 35 non-accredited but sophisticated investors.
• Prohibits general solicitation and advertising.

Rule 506(c):

• Also allows for unlimited capital raising.
• Permits general solicitation and advertising, expanding the potential investor base.
• Requires that all investors be accredited and that the issuer takes reasonable steps to verify their accredited status.

While these rules streamline the capital-raising process, issuers must still file a Form D with the SEC within 15 days of the first sale of securities. Additionally, they must comply with each state’s notification procedures, which typically involve submitting copies of Form D and paying state-specific fees.

State Notification and Compliance

Even though state Blue Sky Laws are preempted by Regulation D for Rules 506(b) and 506(c) offerings, issuers must still notify the states where the securities are offered. This usually entails filing the SEC’s Form D with state securities regulators and paying applicable fees. These filings help states keep track of securities offerings and ensure that issuers are following the federal rules.

In California, for example, issuers must submit a notice of transaction under Section 25102.1(f) within 15 days of the first sale in the state. This involves filing a copy of Form D and a filing fee with the California Department of Financial Protection and Innovation (DFPI).

Intrastate Offerings Under State Blue Sky Laws

In certain cases, an issuer might choose to conduct an offering solely under state Blue Sky Laws rather than using Regulation D. This is particularly relevant for intrastate offerings, where the sponsor, all investors, and the assets are located within the same state.

Intrastate Offering Criteria:

• The entire offering is confined within the state.
• The sponsor, investors, and assets are all located in the same state.
• Compliance with the state’s specific Blue Sky Laws is required.

For instance, a California-based real estate syndicator raising funds exclusively from California investors for a property located in California might opt for an intrastate offering under California’s Blue Sky Laws. This approach can sometimes be more straightforward and cost-effective, depending on the specific circumstances and requirements of the state.

Understanding how state Blue Sky Laws interact with the SEC’s Regulation D is essential for anyone involved in syndication or private placements. While Regulation D offers significant advantages by preempting state registration requirements, issuers must still comply with state notification and filing procedures. For intrastate offerings, state Blue Sky Laws provide a viable alternative, allowing sponsors to tailor their offerings to the specific regulatory environment of their state. By navigating these requirements effectively, issuers can ensure compliance, minimize legal risks, and successfully raise capital.

Why Would I Choose Regulation D Rule 506(b) or Rule 506(c) Over the State’s Blue Sky Laws?

Choosing Regulation D, specifically Rule 506(b) or Rule 506(c), over state Blue Sky Laws offers several compelling advantages for issuers looking to raise capital through private placements. These federal exemptions provide a streamlined and efficient regulatory framework, reducing the complexities associated with state-specific compliance while offering greater flexibility and security. Here are the key reasons for opting for Regulation D:

Federal Preemption and Simplified Compliance

One of the primary benefits of utilizing Regulation D, Rule 506(b) or Rule 506(c), is the preemption of state securities registration requirements. Under 15 U.S. Code § 77r(b)(4)(F), offerings made under these rules are exempt from the need to register with individual state securities regulators. This federal preemption significantly simplifies the regulatory process, allowing issuers to focus on a single set of federal requirements rather than navigating a patchwork of state laws.

Broadening the Investor Base

Regulation D, especially Rule 506(c), enables issuers to access a broader pool of potential investors:

• Rule 506(b) permits raising an unlimited amount of capital without general solicitation, allowing sales to an unlimited number of accredited investors and up to 35 non-accredited but sophisticated investors. This flexibility is ideal for private offerings where maintaining confidentiality and exclusivity is crucial.
• Rule 506(c) allows for general solicitation and advertising, significantly expanding the potential investor base. Issuers can publicly market their offerings, provided all investors are accredited and their status is reasonably verified. This ability to reach a larger audience can be particularly advantageous for larger capital raises and expanding the investor network.

Avoiding Intrastate Offering Risks

Opting for Regulation D helps avoid the risks associated with intrastate offerings under state Blue Sky Laws. For an offering to qualify as intrastate, the sponsor, all investors, and the assets must be located within the same state. However, if any investor or the sponsor is outside the state, the offering cannot fall under intrastate Blue Sky Laws. This scenario presents significant risks:

• Discovery of Out-of-State Investors: There is always a possibility that an investor, initially believed to be domiciled within the state, is actually outside of it. This misclassification can inadvertently violate intrastate offering rules.
• Securities Law Problems: If an offering initially structured as intrastate is later found to include out-of-state investors, it could result in serious securities law violations. The offering would no longer comply with the state exemption, potentially leading to penalties, legal disputes, and the need to retroactively comply with federal regulations.

By choosing Regulation D, issuers mitigate these risks. The federal rules of 506(b) and 506(c) provide a clear, consistent framework that applies regardless of the domicile of investors, ensuring broader compliance and reducing legal uncertainties.

Efficient and Cost-Effective Process

Regulation D’s streamlined process is generally more efficient and cost-effective compared to navigating multiple state registration requirements. The key elements include:

• Form D Filing: A single Form D filing with the SEC is required within 15 days of the first sale of securities, with subsequent state notifications.
• Consistent Documentation: Issuers can prepare and use a uniform set of offering documents, such as the private placement memorandum (PPM), across all states, simplifying the legal and administrative workload.
• Reduced Legal Fees: The uniformity and predictability of Regulation D’s rules can lead to lower legal fees compared to dealing with varying state regulations, making it a more economical choice for many issuers.

Choosing Regulation D, Rule 506(b) or Rule 506(c), over state Blue Sky Laws offers numerous advantages, including simplified compliance, the ability to access a broader investor base, and reduced legal risks associated with intrastate offerings. These federal exemptions provide a clear and consistent regulatory framework, ensuring that issuers can efficiently and effectively raise capital while maintaining compliance with securities laws. By leveraging the benefits of Regulation D, issuers can focus on their fundraising goals with confidence and security.

What Are The Notification Rules and Terms For Notifying the State about a Regulation D Rule 506(b) or Rule 506(c) Offering?

When conducting a Regulation D offering under Rule 506(b) or Rule 506(c), issuers must comply with both federal and state notification requirements. Although these federal rules preempt state registration requirements, issuers are still required to submit certain filings and pay fees to state regulators to ensure transparency and compliance. Below are the specific notification rules and terms for notifying the state about a Regulation D offering:

Federal Notification Requirements

Under Regulation D, issuers must file a Form D with the Securities and Exchange Commission (SEC) within 15 days of the first sale of securities. This filing includes detailed information about the offering, the issuer, and the investors. Form D can be filed electronically through the SEC’s EDGAR system.

State Notification Requirements

In addition to the federal filing, issuers must also comply with state-specific notification requirements for each state where the securities are offered. These requirements generally include filing copies of Form D and paying applicable fees. For many states, including California, the notification process has been streamlined through the NASAA Electronic Filing Depository (EFD).

California Notification Rules:

Filing Fee: A fixed fee is required when notifying the state of a Regulation D offering. In California, the fee structure is straightforward:

• New Notice: $300

New Notice Filing: Issuers must submit a notice of transaction under Section 25102.1(f) within 15 days of the first sale of securities in California. This involves filing a copy of Form D and paying the $300 filing fee. The notice and fee are submitted electronically through the NASAA Electronic Filing Depository (EFD).

Late Filing Fee: Unlike some other states, California does not impose a late fee for filings submitted after the 15-day deadline. However, timely filing is still crucial to maintain compliance and avoid potential issues.

Steps for Notifying the State

Here’s a step-by-step guide to ensure compliance with state notification requirements for a Regulation D offering in California:

Prepare Form D: Complete the Form D with all required information about the offering, issuer, and investors.

File with the SEC: Submit Form D electronically through the SEC’s EDGAR system within 15 days of the first sale of securities.

Submit Notice through NASAA EFD:

• Access the NASAA Electronic Filing Depository (EFD) website here.
• Create an account or log in to the EFD system.
• Upload the completed Form D and any required state-specific forms.
• Pay the $300 filing fee through the EFD system.

Monitor Compliance: Keep track of all filing dates and confirmations to ensure ongoing compliance with both federal and state regulations.

Importance of Timely Notification

Timely notification to state regulators is essential for maintaining compliance and avoiding potential legal issues. Although California does not impose a late fee, failing to file the required notices within the specified timeframe can still lead to scrutiny and complications. Adhering to the 15-day notification rule helps issuers maintain a good standing with regulators and ensures that their offerings proceed smoothly.

Understanding and adhering to the notification rules and terms for notifying the state about a Regulation D Rule 506(b) or Rule 506(c) offering is crucial for legal compliance. In California, this involves submitting a copy of Form D and paying a $300 filing fee through the NASAA Electronic Filing Depository (EFD) within 15 days of the first sale of securities. By following these steps, issuers can ensure that they meet both federal and state requirements, allowing them to focus on successfully raising capital through their offerings.

What are California’s Blue Sky Laws?

Blue sky laws are state regulations designed to protect investors from fraudulent securities practices. In California, these laws are detailed in the Corporations Code, addressing various aspects of securities offerings and transactions. For instance, Section 25110 requires securities to be qualified unless exempt, ensuring they meet regulatory standards. Section 25130 prohibits unqualified securities in nonissuer transactions, while Section 25608 outlines fees for various filings related to securities. Additionally, Sections like 25163 and 25164 focus on the burden of proof for exemptions and the implications of filing applications, respectively. These regulations collectively aim to maintain market integrity and investor confidence in California’s securities market.

CA CIVIL § 1917.068 Exemption from qualification requirements for corporate securities

California Civil Code Section 1917.068 (2021) specifies that certain qualification requirements from the Corporations Code do not apply to shared appreciation loans. These exemptions apply if the loan obligation is evidenced by a single promissory note secured by a deed of trust, and if the loan is not represented by fractional undivided interests in the same real property. This provision ensures specific conditions under which these loans can bypass standard regulatory qualifications.

CA CIVIL § 1917.168 Exemption from qualification requirements for corporate securities

California Civil Code Section 1917.168 (2021) states that the qualification requirements detailed in Sections 25110, 25120, and 25130 of the Corporations Code do not apply to shared appreciation loans if they fall under the exemption provided by subdivision (p) of Section 25100 of the Corporations Code. This means that certain shared appreciation loans are exempt from these specific regulatory requirements, simplifying the qualification process for these loans under specified conditions.

CA CORP § 25100 Securities exempt from provisions of sections 25110, 25120, 25130

California Corporations Code Section 25100 (2011) enumerates various securities exempt from the qualification requirements in Sections 25110, 25120, and 25130. These exemptions include securities issued or guaranteed by the government, banks, savings associations, insurance companies, public utilities, non-profit organizations, and others. The section outlines specific conditions under which these exemptions apply, ensuring that certain securities can be issued or traded without the need for qualification, thereby simplifying regulatory compliance for those entities.

CA CORP § 25101 Securities exempt from provisions of S 25130

California Corporations Code Section 25101 (2011) specifies that securities issued by entities listed on a national securities exchange, certified by rule or order of the commissioner, are exempt from the provisions of Section 25130. However, this exemption does not apply to securities offered under the Securities Act of 1933 or Regulation A if the offering price exceeds $50,000. This provision aims to streamline compliance for specific securities under regulated conditions.

CA CORP § 25110 Necessity of qualification of security or exemption of security or transaction

California Corporations Code Section 25110 makes it unlawful to offer or sell any security in an issuer transaction within the state without proper qualification under Sections 25111, 25112, or 25113. This rule applies unless the security or transaction is exempt from qualification under Chapter 1 (starting with Section 25100). Any offer or sale that deviates materially from the terms of qualification will be considered unqualified and therefore illegal.

CA CORP § 25120 Necessity of qualification of security or exemption of security or transaction

California Revenue and Taxation Code Section 25120 defines “business income” as income arising from transactions and activities in the regular course of the taxpayer’s trade or business, including income from tangible and intangible property if these activities are integral to the business operations. “Nonbusiness income,” on the other hand, refers to all other income types and is only allocable to California if the taxpayer’s commercial domicile is in the state. This distinction is crucial for tax purposes under the Uniform Division of Income for Tax Purposes Act (UDITPA).

CA CORP § 25130 Necessity of qualification of security or exemption of security or transaction

California Corporations Code Section 25130 (2017) prohibits the offer or sale of any security in nonissuer transactions within the state unless the security is qualified under the relevant chapters or exempted. This section ensures that securities transactions adhere to regulatory qualifications to maintain market integrity and protect investors.

CA CORP § 25163 Burden of proving exemption or exception

California Corporations Code Section 25163 (2011) establishes that in any legal proceeding under securities laws, the burden of proving an exemption or an exception from a definition falls on the person asserting it. This means that individuals or entities claiming an exemption from securities regulation requirements must provide the necessary proof to support their claim.

CA CORP § 25164 Facts not constituting finding that document filed is true, complete or not misleading; unlawful representation; required statement on permit

California Corporations Code Section 25164 (2011) clarifies that the filing of an application for qualification or the effectiveness of such a qualification does not imply that the commissioner has verified the truth, completeness, or accuracy of any document filed. It also does not indicate the commissioner’s approval or endorsement of any person, security, or transaction. Furthermore, it is illegal to make representations to prospective purchasers that contradict this. All permits issued must state clearly that they do not constitute a recommendation or endorsement of the securities.

CA CORP § 25532 Orders to desist and refrain from certain activities; claims for ancillary relief; hearing; procedure

California Corporations Code Section 25532 (2011) empowers the commissioner to issue cease and desist orders against the offer or sale of unqualified securities or against unlicensed broker-dealer or investment adviser activities. If a hearing request is filed within 30 days of service, a hearing will be held per the Administrative Procedure Act. Failure to request a hearing within 30 days renders the order final and not subject to review.

CA CORP § 25608 Fees; charge and collection; disposition

California Corporations Code Section 25608 outlines various fees charged by the commissioner for different filings and applications related to securities. These fees include $200 for filing an application for the sale of securities by coordination or notice of intention to sell, with additional charges based on the value of the securities up to a maximum of $2,500. The section also specifies fees for applications related to stock splits, mergers, or corporate reorganizations, and imposes different charges for broker-dealers and investment advisers. Moreover, it includes provisions for the commissioner’s authority to assess additional fees and penalties for late payments and details on how the collected fees should be handled and credited to the Financial Protection Fund​.

CA CORP § 25611 List of qualified or exempt securities

California Corporations Code Section 25611 (2021) allows the commissioner to create and distribute lists of persons whose securities are qualified, exempt, or not subject to qualification for trading in the state. These lists are made available to interested parties for a reasonable fee to cover preparation and dissemination costs. This provision helps maintain transparency and accessibility regarding the status of securities in the state.

What are the Securities Laws Exemptions under the California Blue Sky Laws?

When it comes to raising capital in California, the role of the state’s Blue Sky Laws, specifically the securities exemptions within these laws, cannot be overstated. These exemptions cover a wide variety of securities and issuers, providing a path for organizations to raise capital without undergoing the standard, often arduous, securities registration process.

Key Exemptions under California Blue Sky Laws

California’s Blue Sky Laws, codified in the California Corporations Code Sections 25100 through 25105, outline various exemptions that allow issuers to bypass the traditional registration requirements. Here are some notable exemptions:

Governmental Entities (Section 25100(a)):

• Securities issued by governmental entities, including domestic and certain foreign governments such as Canada, are exempt due to the inherent regulatory oversight they undergo.

Financial Institutions (Section 25100(c)):

• This exemption covers a wide range of institutions, including banks, trust companies, savings associations, savings banks, land banks, farm loan associations, credit unions, and industrial loan companies. These organizations are regulated by other frameworks, thus negating the need for additional oversight under Blue Sky Laws.

Insurance and Public Utilities (Section 25100(d) and 25100(e)):

• Securities regulated by insurance or public utilities commissions, as well as those overseen by the Real Estate Commissioner, are exempt. This includes securities related to real estate and mortgages.

Unincorporated Inter-Indemnity Contracts (Section 25100(f)):

• Exemptions apply to unincorporated inter-indemnity, reciprocal, and interinsurance contracts, reflecting their unique nature and regulatory treatment.

Railroads, Common Carriers, Public Utilities, and Holding Companies (Section 25100(g)):

• Securities issued by these entities enjoy exemptions due to their specific regulatory environments.

Listed Securities (Section 25100(h)):

• Securities listed on recognized stock exchanges are exempt because of the stringent requirements necessary to secure such listings.

Non-Profit Organizations and Cooperatives (Section 25100(i)):

• Non-profit organizations, cooperative associations, and consumer cooperative corporations can issue exempt securities, acknowledging their unique operational structures.

Life Income Contracts (Section 25100(j)):

• Life income contracts are exempt, recognizing their role in financial planning and stability.

Commercial Paper (Section 25100(k)):

• Commercial paper related to current transactions is exempt due to its nature and use in business operations.

Employee Benefit Plans (Section 25100(l)):

• Securities related to employee benefit plans are exempt, reflecting their importance in financial security for employees.

Procedures for Claiming Exemptions

Understanding the procedures for claiming these exemptions is crucial for compliance and efficient capital raising in California. The process varies based on the type of security or issuer but typically involves submitting a notice and paying an application fee.

Life Income Contracts:

• A $50 application fee is required to qualify for the exemption.

Industrial Loan Companies:

• Must pay a $200 fee plus an additional amount based on the value of the security, capped at $2,500. This is submitted along with a notice of intent to sell.

Issuers of Commercial Paper:

• A $250 application fee applies, which, despite the cost, is often more efficient than the full securities registration process.

Navigating the securities laws exemptions under California Blue Sky Laws can significantly streamline the capital-raising process for eligible issuers. These exemptions cover a wide range of entities and securities, reducing the regulatory burden and facilitating efficient fundraising. Understanding and leveraging these exemptions, alongside the appropriate procedures, can be a crucial strategy for organizations looking to raise capital in California.

What are California’s Procedures for Securities Law Exemptions?

Navigating the procedures for claiming securities law exemptions under California’s Blue Sky Laws is essential for issuers seeking to raise capital efficiently while ensuring compliance with state regulations. These procedures vary depending on the type of security and the specific exemption being claimed. Below is a detailed overview of the steps involved in securing these exemptions.

General Procedure for Claiming Exemptions

Determine Eligibility:

• Review the specific exemptions under California Corporations Code Sections 25100 through 25105 to determine if the security or issuer qualifies for an exemption.

Prepare Necessary Documentation:

• Gather all required documents, including a completed Form D (if applicable) and any state-specific forms.
• Ensure that all information is accurate and complete to avoid delays or rejections.

Submit Notice and Filing Fees:

• Use the NASAA Electronic Filing Depository (EFD) to submit the necessary forms and fees. The EFD streamlines the filing process, allowing for electronic submissions and payments.

Specific Procedures for Common Exemptions

Governmental Entities (Section 25100(a)):

• Generally, no filing is required due to the inherent regulatory oversight these entities undergo.

Financial Institutions (Section 25100(c)):

• Most financial institutions do not need to file for these exemptions. However, it’s important to verify if any additional state-specific requirements apply.

Insurance and Public Utilities (Sections 25100(d) and 25100(e)):

• Verify whether your security is already under the jurisdiction of an insurance or public utilities commission. Typically, no additional filing is necessary.

Unincorporated Inter-Indemnity Contracts (Section 25100(f)):

• File a notice of exemption through the NASAA EFD if applicable. Confirm specific documentation required for these contracts.

Railroads, Common Carriers, Public Utilities, and Holding Companies (Section 25100(g)):

• Typically exempt from filing; however, review the specific regulatory requirements governing these entities.

Listed Securities (Section 25100(h)):

• Securities listed on recognized stock exchanges do not require additional state filings due to the stringent listing requirements.

Non-Profit Organizations and Cooperatives (Section 25100(i)):

• Submit the necessary exemption notice via the NASAA EFD and ensure compliance with any additional documentation requirements specific to non-profits and cooperatives.

Life Income Contracts (Section 25100(j)):

• Pay a $50 application fee and submit a notice of exemption via the NASAA EFD.

Commercial Paper (Section 25100(k)):

• Submit a notice of exemption along with a $250 application fee through the NASAA EFD.

Employee Benefit Plans (Section 25100(l)):

• Verify if any specific state filings are necessary. Often, these are regulated under federal ERISA provisions and may not require additional state-level filings.

Using the NASAA Electronic Filing Depository (EFD)

The NASAA EFD is an online platform that simplifies the process of submitting filings and fees for securities exemptions. Here are the steps to use the EFD for submitting a notice of exemption in California:

Access the EFD System:

• Go to the NASAA EFD website here.

Create an Account or Log In:

• If you do not already have an account, you will need to create one. If you have an account, simply log in.

Complete the Filing:

• Select the appropriate form for the exemption you are claiming.
• Fill out all required fields accurately.

Upload Documents:

• Upload the necessary documents, such as Form D and any state-specific forms.

Pay the Filing Fee:

• Pay the required filing fee online through the EFD system.

Submit the Filing:

• Review your filing for accuracy and completeness.
• Submit the filing and retain confirmation for your records.

Monitoring and Compliance

After submitting the necessary filings, it is important to:

• Track Confirmation: Ensure you receive confirmation of your submission from the EFD and retain it for your records.
• Monitor Deadlines: Stay aware of any follow-up deadlines or additional requirements that may arise.
• Maintain Records: Keep thorough records of all filings, confirmations, and correspondence with regulators.

Understanding and adhering to California’s procedures for securities law exemptions can greatly facilitate the capital-raising process. By using the NASAA Electronic Filing Depository and following the specific steps for each exemption, issuers can efficiently comply with state regulations while focusing on their fundraising efforts. This streamlined process not only ensures legal compliance but also supports the efficient execution of capital-raising activities in California.

Frequently Asked Questions

Do I Need an Attorney from California to Put Together an Offering?

Whether you need an attorney from California to put together an offering largely depends on the specifics of your capital-raising strategy and the regulatory framework you intend to use. If your offering falls under Regulation D and not one of the California-specific Blue Sky Laws, you may not necessarily need a California-licensed attorney.

For example, if you are organizing a real estate syndication for a multifamily deal in Los Angeles, California, and plan to offer this opportunity to investors across various states, a syndication attorney licensed outside of California can typically handle most aspects of the transaction. This attorney can prepare the private placement memorandum (PPM), set up the necessary legal entities, and draft the operating agreement. However, they would not be able to provide legal counsel on specific California securities laws and how they may impact your offering.

On the other hand, if your project is strictly intrastate – for instance, a development project in San Diego, California, where all investors are based in California – and you wish to take advantage of California’s specific Blue Sky Laws exemptions, you would need to work with a California-licensed attorney. Such an attorney would be equipped to navigate the nuances of California securities laws, ensure compliance with state-specific requirements, and help you leverage relevant exemptions to avoid the full registration process.

In summary, for multi-state offerings under Regulation D, an out-of-state syndication attorney can often provide comprehensive legal support. However, for offerings confined to California and reliant on state-specific exemptions, engaging a California-licensed attorney is essential to ensure full compliance with California’s securities regulations.

Is it OK if the Real Estate Syndication Attorney, Licensed Outside of California, Looks Over My Purchase Contract?

While a real estate syndication attorney licensed outside of California can review your purchase contract, their ability to provide specific legal advice related to California laws is limited. They can offer general insights and discuss broad terms of the contract, such as the purchase price and the length of time until closing. However, they cannot provide detailed advice on how California-specific laws may impact your transaction.

For example, Tilden Moschetti, Esq., a syndication attorney with the Moschetti Syndication Law Group, is licensed in California and can offer comprehensive legal counsel on contracts pertaining to California properties. He can address specific California laws and provide tailored business consulting advice. This level of detailed, state-specific guidance is crucial for ensuring that all legal aspects of your purchase contract comply with California regulations.

In contrast, an attorney not licensed in California can only speak in broad terms and cannot offer the nuanced legal advice necessary for dealing with California real estate transactions. For contracts involving properties in California, it is highly advisable to work with an attorney who is licensed in the state to ensure all legal and regulatory requirements are properly addressed.