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
Requirements of Sponsors
Section 260.140.111.2 - Net Worth Requirement of General Partner

(a) The financial condition of the general partner(s) must be commensurate with any financial obligations assumed in the offering and in the operations of the program. At a minimum, the general partner(s) shall have an aggregate financial net worth of the lesser of (a) $1,000,000 or (b) the greater of either (1) $100,000 or (2) an amount at least equal to 5% of the gross amount of all offerings sold within the prior twelve months plus 5% of the gross amount of the current offering. The gross amount of offerings includes amounts to be received on account of mandatory deferred payments. Evaluation will be made of contingent liabilities and the use of promissory notes to determine the appropriateness of their inclusion in determining net worth. The Commissioner may require the general partner(s) to present evidence of ability to maintain this net worth for a period of 3 years after completion of the offering.

(b) If promissory notes are used to satisfy the net worth requirements of this Section, the application shall include a copy of the note(s) and financial statements of the maker demonstrating the maker's ability to satisfy the terms of the note. Such financial statements shall comply with paragraphs (b), (c) and (d) of Section 260.140.118.4, provided that, if permitted by the Commissioner, the financial statements of the maker need not be included in the prospectus. The Commissioner may require the note(s) to contain such terms and conditions as may be necessary to assure that the note is an enforceable obligation of the maker, including requiring the maker to waive all defenses in any action to enforce the notes and requiring the note to be full recourse obligation of the maker.