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
Introduction
Section 260.140.110.2 - Definitions

(a) Acquisition Expenses--expenses including but not limited to legal fees and expenses, travel and communication expenses, cost of appraisals, non-refundable option payments on property not acquired, accounting fees and expenses, title insurance, and miscellaneous expenses related to selection and acquisition of properties, whether or not acquired.

(b) Acquisition Fee--the total of all fees and commissions paid by any party in connection with the purchase or development of property by a program, except a development fee paid to a person not affiliated with a sponsor, in connection with the actual development of a project after acquisition of the land by the program. Included in the computation of such fees or commissions shall be any real estate commission, acquisition fee, selection fee, development fee, non-recurring management fee, or any fee of a similar nature, however designated.

(c) Affiliate--Affiliate of a person means:

(d) Appraised Value--value according to an appraisal made by an independent qualified appraiser. Such qualification may be demonstrated by membership in a nationally recognized appraisal society such as Member Appraisal Institute ("M.A.I."), Society of Real Estate Appraisers ("S.R.E.A."), or their equivalent, but is not limited thereto.

(e) Assessments--additional amounts of capital which may be required to be paid or paid at the option of a limited partner beyond the limited partner's subscription commitment excluding mandatory deferred payments.

(f) Audited Financial Statements--financial statements (balance sheet, statement of income, statement of partners' equity, and statement of cash flows) prepared in accordance with generally accepted accounting principles and accompanied by an independent auditor's report containing:

(g) Capital Contribution--the gross amount of investment in a program by a participant, or all participants as the case may be. Unless otherwise specified, capital contribution shall include principal amounts to be received on account of mandatory deferred payments.

(h) Cash Available for Distribution from Operations--program cash funds provided from operations, including lease payments on net leases from builders and sellers, without deduction for depreciation, but after deducting cash funds used to pay all other expenses, debt payments, capital improvements, amounts set aside for restoration or creation of reserves, and replacements.

(i) Cash Available From Sale and Refinancing--program cash funds provided from a sale, financing or refinancing of property less the amount necessary for the payment of all debts and obligations of the partnership related to the particular property, the expenses incurred in the sale, financing or refinancing, and amounts set aside for restoration or creation of reserves.

(j) Competitive Real Estate Commission--a real estate or brokerage commission paid for the purchase or sale of property which is reasonable, customary and competitive in light of the size, type and location of the property.

(k) Construction Fee--a fee for acting as general contractor to construct improvements on a program's property either initially or at a later date.

(l) Development Fee--a fee for the packaging of a program's property, including negotiating and approving plans, and undertaking to assist in obtaining zoning and necessary variances and necessary financing for the specific property, either initially or at a later date.

(m) Mandatory Deferred Payments--deferred payments on account of the purchase price of program interests offered in accordance with 17 Code of Federal Regulations 240.3a12-9.

(n) Net Worth--the excess of total assets over total liabilities as determined by generally accepted accounting principles, except that if any of such assets have been depreciated, then the amount of depreciation relative to any particular asset may be added to the depreciated cost of such asset to compute total assets, provided that the amount of depreciation may be added only to the extent that the amount resulting after adding such depreciation does not exceed the fair market value of such asset.

(o) Non-Specified Property Program--a program where, at the time the qualification becomes effective, 75% or less of the net proceeds from the sale of program interests is allocable to the purchase, construction, or improvement of specific properties, or a program in which the proceeds from any sale or refinancing of properties may be reinvested. Reserves shall be included in the non-specified portion. Net proceeds shall include principal amounts to be received on account of mandatory deferred payments.

(p) Organization and Offering Expenses--actual expenses incurred in connection with and in preparing a program for qualification and subsequently offering and selling program interests, including, but not limited to, sales commissions paid to broker-dealers in connection with the distribution of program interests and all advertising expenses related to the offer and sale of program interests.

(q) Participant--the holder of a program interest.

(r) Person--any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or other legal entity.

(s) Program--any organization, other than a corporation or a real estate investment trust, which has as a primary purpose the investment in, operation of, or receipt of gain from an interest in real property.

(t) Program Interest--a limited partnership unit or other indicia of ownership in a program.

(u) Program Management Fee--a fee paid to the sponsor or other persons for management and administration of the program.

(v) Property Management Fee--the fee paid for professional property management services in connection with a program's real property projects.

(w) Prospectus--shall have the meaning given to that term by Section 2(10) of the Securities Act of 1933, including a preliminary prospectus; provided, however, that such term as used herein shall also include an offering circular as described in Rule 256 of the General Rules and Regulations under the Securities Act of 1933 or, in the case of an intrastate offering, any document by whatever name known, utilized for the purpose of offering and selling securities to the public.

(x) Purchase Price--means the total consideration paid for a property, including acquisition fees and all liens and mortgages on the property, but excluding points and prepaid interest.

(y) Specified Property Program--a program other than a non-specified property program.

(z) Sponsor--any person directly or indirectly instrumental in organizing, wholly or in part, a program or any person who will manage or participate in the management of a program, including the general partner(s) and any affiliate of any such person, but does not include a person whose only relation with the program is that of an independent property manager, whose only compensation is as such. "Sponsor" does not include wholly independent third parties such as attorneys, accountants, and underwriters whose only compensation is for professional services rendered in connection with the offering of program interests.