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The definition of a “real estate broker” under California real estate law encompasses much more than just the sale of real estate. For example, section 10131.3 of the Business and Professions Code defines a real estate broker as “a person who, for one or others, for remuneration or in expectation of remuneration, issues or sells, solicits prospective sellers or buyers, solicits or obtains lists of, or negotiates the purchase, sale or exchange of transferable securities as specified in article 25206 of the Companies Code”. Section 25206 of the Companies Code exempts a person authorized by the Real Estate Commissioner when engaged in transactions involving interests in certain unincorporated real estate entities.

Not all real estate entities are covered by Section 25206. Significantly, corporations are excluded. They must also be beneficially owned by no more than 100 people (spouses being counted as one person) and be formed for the sole purpose of investing in or profiting from an interest in real property, including, but not limited to, a sale, exchange, trade or development. For the Companies Commissioner’s views on what constitutes a real estate entity subject to this exemption, see Communiqué 62-C.

Licensed stockbrokers who sell interests in unincorporated real estate entities are also not subject to licensing as real estate brokers, as Section 10131.3 provides that it does not apply to a broker in securities or the agent of a securities broker approved by the commissioner for the supervision of enterprises.
[sic] in accordance with the provisions of the Companies Securities Act of 1968.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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