California Code of Regulations
Title 10 - Investment
Chapter 3 - Commissioner of Financial Protection and Innovation
Subchapter 2 - Corporate Securities
Article 4 - Standards for the Exercise of the Commissioner's Authority
Subarticle 10 - Real Estate Programs
Fees-Compensation-Expenses
Section 260.140.113.5 - Promotional Interests and Program Management Fees

(a) An adequately subordinated interest in the program will be allowed as a promotional interest and program management fee, provided the amount or percentage of such interest is reasonable. Such interest will be considered adequately subordinated and presumptively reasonable if it is within the limitations expressed in either subparagraph below:

(b) For the purposes of this Section, the capital contributions of participants shall only be reduced by distributions to participants from cash available from sale and refinancing of program properties and distributions from reserves created from the proceeds of the offering.

(c) Dissolution and liquidation of the partnership. The distribution of assets upon dissolution and liquidation of the partnership shall conform to the applicable subordination provisions of subparagraphs (a)(1) and (a)(2)(B) herein, and appropriate language to this effect shall be included in the partnership agreement.

(d) The cumulative benefits required by subparagraphs (a)(1) and (a)(2)(B) herein, shall commence no later than the end of the calendar quarter in which the participant's capital contribution is made. A program may elect an earlier date if it so chooses.