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 260.140.113.8 - Property Management Fee

Universal Citation: 10 CA Code of Regs 260.140.113.8

Current through Register 2024 Notice Reg. No. 38, September 20, 2024

(a) The sponsor may render property management services to the program provided such services are necessary to the prudent operation of the program and the sponsor maintains adequate staff to perform such services. Property management fees paid to the sponsor may not exceed the lesser of the fees set forth in subparagraphs (1) through (3) below or the fees which are competitive with amounts charged by unaffiliated parties for similar services in the same geographic location. Included in such fees shall be amounts paid for bookkeeping services and fees paid to persons unaffiliated with the sponsor for property management services.

(1) In the case of residential property, the maximum property management fee (including all rent-up, leasing, re-leasing fees and bonuses, and leasing related services, paid to any person) shall be 5% of the gross revenues from such property.

(2) In the case of industrial and commercial property, except as set forth in subparagraph (3) below, the maximum property management fee shall be 6% of the gross revenues from such leases where the sponsor performs leasing, re-leasing and leasing related services. The maximum property management fee from such leases shall be 3% of the gross revenues where the sponsor does not perform leasing, re-leasing, and leasing related services with respect to the property.

(3) In the case of industrial and commercial properties which are leased on a long term (ten or more years) net (or similar) basis, the maximum property management fee from such leases shall be 1% of the gross revenues, except for a one-time initial leasing fee of 3% of the gross revenues on each lease, which fee is payable over the first five full years of the original term of the lease.

(b) Any property management services for which the sponsor is to receive compensation shall be rendered pursuant to a written contract, fully disclosed in the prospectus, which precisely describes the services to be rendered and all compensation to be paid. Such contract shall provide that it may only be modified in any material respect by the vote of a majority in interest of limited partners. The contract shall contain a clause allowing termination without penalty on 60 days' notice.

1. New section filed 5-18-92; operative 6-17-92 (Register 92, No. 22).
2. Editorial correction moving "Conflicts of Interest and Investment Restrictions" subheading to section 260.140.114.1 (Register 92, No. 34).

Note: Authority cited: Section 25610, Corporations Code. Reference: Section 25140, Corporations Code.

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