Articles Posted in Fraud

Red Rock CanyonAuthor: Staff

Real estate syndication allows you to put your private savings into real estate investments when other financing isn’t available for them. The syndicator’s responsibilities and obligations to an investment group and the investors’ responsibilities to each other are determined by how the syndication is organized.

Choosing the form of organization requires the syndicator to look at the advantages and disadvantages of each. Many people prefer a limited partnership. When there is a corporate form, you can have central management, but most syndicates do not use this form because of negative tax consequences. General partnerships allow you to avoid double taxation but incur unlimited liability, and in addition, there is no central management. A limited partnership allows you to have centralized management but also keep certain tax advantages.

Some syndicates are organized as limited liability companies. This form allows members to actively participate in managing the syndicate and provides for limited liability with specific exceptions. It can incur taxes like a partnership, while avoiding certain double taxation problems that happen when the form of the syndicate is a corporation. But an LLC cannot hold a real estate license in California.

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freewayAuthor: Staff

In a recent California appellate case, DNI Food Service, Inc. dba Zaya’s Bistro v. Kim, the owner of a multi-tenant retail building in Los Angeles County was notified that two parcels of its land would be affected by a freeway expansion project. The building wasn’t located on either of the parcels, and there were five tenant vacancies.

Caltrans planned to take some land located between the street and building and create an easement over the sidewalk. Real estate agents working for the builder were communicating with Caltrans. At about the same time, these real estate agents advertised tenant space in the building, marketing the property on the basis of its location and its reduced rents. A food services company and its owner saw the ad and contacted the agents. They were hoping for a two-year lease but signed a five-year lease with a personal guarantee. The food services company spent money and time and opened a restaurant in the spot that they rented.

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