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
Suitability of the Participant
Section 260.140.112.1 - Standards to Be Imposed

Given the limited transferability, lack of liquidity, and the risks associated with investments in real estate programs, the sponsor and each person selling program interests on behalf of the sponsor or program shall be cautious concerning the persons to whom such securities are marketed. Suitability standards will be imposed which are reasonable in view of the foregoing and the type of program to be offered. In determining how restrictive the suitability standards must be, the Commissioner will consider the type of program and the existence of such factors as high leverage, tax implications, mandatory deferred payments, balloon payment financing, excessive investments in unimproved land, and the prospect of uncertain or no cash available for distribution from operations. Programs which involve more than ordinary investor risk should emphasize suitability standards for investors of high net worth and/or income.

1. Amendment filed 1-27-84; effective thirtieth day thereafter (Register 84, No. 4).
2. Amendment filed 5-18-92; operative 6-17-92 (Register 92, No. 22).
3. Editorial correction (Register 95, No. 48).

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