Real Estate Syndicates and Real Estate Investment Trusts

Real Estate Syndication

gives a person the chance to channel his or her private savings into real estate investments for which other financing cannot be obtained or is not available because of the large amount of money involved.
In addition, syndication allows for professional m

Syndication is accomplished through three phases:

Origination (planning and buying the property, following registration and disclosure mandates, etc.);
Operation (in which the sponsor generally manages BOTH the syndicate and the actual property); and
Completion or Liquidation (the property's resale).

The California Department of Corporations and Real Estate Syndicate Act
The Real Estate Syndicate Act

went into effect in 1970. This law handed the jurisdiction of some non-corporate syndicates from the Department of Corporations to the Bureau of Real Estate. Other syndicate offerings remained with the Department of Corporations.
However, the Real Estate

Syndication Forms:

The Corporate Form
The General Partnership, or Joint Venture
The Limited Partnership offers many of the advantages found in both of the above syndication forms: the corporate advantages of limited liability and centralized management, and the tax advantag

The Corporate Form

which allows for both centralized management and limited liability for the investors, but, on the downside, has negative tax features that make it unappealing for modern syndicates.

The General Partnership, or Joint Venture

which avoids the double taxation (which a "regular" corporation would incur), but, on the negative side, there is an unlimited liability provision, as well as a lack of centralized management.

The Limited Partnership

offers many of the advantages found in both of the above syndication forms: the corporate advantages of limited liability and centralized management, and the tax advantages of a partnership.
Because of this, the limited partnership form is one of the most

The California Revised Limited Partnership Act, also known as the RLPA

can be found under the Corporations Code Section 15632. The RLPA says that a limited partner is NOT liable as a GENERAL partner UNLESS that limited partner is ALSO NAMED as a general partner in the certificate of limited partnership OR IF that limited par

Real Estate Investment Trusts
A real estate investment trust, also known as a REIT,

is a type of company that sells securities specializing in real estate ventures, and requires a minimum of 100 investors. REITS, sometimes referred to as the "mutual funds" of the real estate business, were created in 1960 as an aspect of the federal tax

There are two types of REITs:

An Equity Trust : A company that invests in real estate itself or in several real estate projects; or
A Mortgage Trust : A company that invests in mortgages and other types of real estate loans/obligations
There are also combined trust companies that enga

Qualification as a Trust

Regarding taxation, there are many legal mandates that must be fulfilled to meet the qualification for a "trust" and thereby qualify for the tax benefits of other regulated investments, such as mutual funds, as mentioned previously. One of these requireme

Real Estate Syndication

gives a person the chance to channel his or her private savings into real estate investments for which other financing cannot be obtained or is not available because of the large amount of money involved.
In addition, syndication allows for professional m

Syndication is accomplished through three phases:

Origination (planning and buying the property, following registration and disclosure mandates, etc.);
Operation (in which the sponsor generally manages BOTH the syndicate and the actual property); and
Completion or Liquidation (the property's resale).

The California Department of Corporations and Real Estate Syndicate Act
The Real Estate Syndicate Act

went into effect in 1970. This law handed the jurisdiction of some non-corporate syndicates from the Department of Corporations to the Bureau of Real Estate. Other syndicate offerings remained with the Department of Corporations.
However, the Real Estate

Syndication Forms:

The Corporate Form
The General Partnership, or Joint Venture
The Limited Partnership offers many of the advantages found in both of the above syndication forms: the corporate advantages of limited liability and centralized management, and the tax advantag

The Corporate Form

which allows for both centralized management and limited liability for the investors, but, on the downside, has negative tax features that make it unappealing for modern syndicates.

The General Partnership, or Joint Venture

which avoids the double taxation (which a "regular" corporation would incur), but, on the negative side, there is an unlimited liability provision, as well as a lack of centralized management.

The Limited Partnership

offers many of the advantages found in both of the above syndication forms: the corporate advantages of limited liability and centralized management, and the tax advantages of a partnership.
Because of this, the limited partnership form is one of the most

The California Revised Limited Partnership Act, also known as the RLPA

can be found under the Corporations Code Section 15632. The RLPA says that a limited partner is NOT liable as a GENERAL partner UNLESS that limited partner is ALSO NAMED as a general partner in the certificate of limited partnership OR IF that limited par

Real Estate Investment Trusts
A real estate investment trust, also known as a REIT,

is a type of company that sells securities specializing in real estate ventures, and requires a minimum of 100 investors. REITS, sometimes referred to as the "mutual funds" of the real estate business, were created in 1960 as an aspect of the federal tax

There are two types of REITs:

An Equity Trust : A company that invests in real estate itself or in several real estate projects; or
A Mortgage Trust : A company that invests in mortgages and other types of real estate loans/obligations
There are also combined trust companies that enga

Qualification as a Trust

Regarding taxation, there are many legal mandates that must be fulfilled to meet the qualification for a "trust" and thereby qualify for the tax benefits of other regulated investments, such as mutual funds, as mentioned previously. One of these requireme