Roger Neal's Courses on Note Creation? - Posted by Joe (CA)

Posted by Joe (CA) on January 10, 2001 at 20:53:50:

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Roger Neal’s Courses on Note Creation? - Posted by Joe (CA)

Posted by Joe (CA) on January 09, 2001 at 14:52:21:

I am interested only in creating notes to hold, not note brokering (requires Broker’s license in CA). Does anyone have an opinion of Roger Neal’s material?


Re: Roger Neal’s Courses on Note Creation? - Posted by Jon Richards

Posted by Jon Richards on January 10, 2001 at 19:47:41:

I read Mr. Neal’s package for review and found it full of “war” stories, with little education. Would be glad to hear a rebuttal, even from Mr. Neal.

As for brokering notes in CA without a CA Broker’s license, the law is unclear. The DRE notwithstanding. See attorney John Beck’s article at The largeinstitutional note buyers will buy from you with no problem. The problem comes when you sell to private parties. Avoid that and you should have no problems.

Good luck

Jon Richards
NoteWorthy Newsletter

Re: Roger Neal’s Courses on Note Creation? - Posted by David Butler

Posted by David Butler on January 09, 2001 at 17:25:06:

Hello Joe,

I apologize, but I am not familiar with Roger’s material. I did however want to make sure you did not confuse people by the reference to licensing requirements in the state of California with regard to brokering notes. There are several notable exceptions to the California licensing requirements, including a possible huge exception with regard to the brokering of notes to institutional buyers as opposed to “the public”. I say possible in reference to this last exception, due to the differing legal opinions on the matter, the lack of “on-point” case law on that issue, and the very limited likelihood of any state “policing action” which would seek out such a transaction for prosecution.

Hope this helps clarify that part of it, and best of luck in getting the skinny on Roger’s material.

David P. Butler

Thank You. - Posted by Joe (CA)

Posted by Joe (CA) on January 10, 2001 at 20:42:24:

Your review of Mr. Neal’s materials is reinforced by the audio clips he has available for download at his site. Nothing but stories.

Thanks also for the CA Broker input as well. Mr. Beck states the case against very well.


Re: Roger Neal’s Courses on Note Creation? - Posted by Joe (CA)

Posted by Joe (CA) on January 09, 2001 at 18:00:09:

Thank you David.

I am aware of the differing legal opinions regarding brokering. I have read the CA law myself. I am not an attorney, but as you probably know, the law definitely allows up to 8 transactions per year without a license, counting both the purchase and sale as separate transactions. This is exception is made only for those that are buying and selling a note for their own account. Beyond that it states that a broker’s license is required. The point is arguable because the statute does not specify a distinction bewteen intitutional and private buyers. As you are correct in pointing out, the case law is inconclusive.

Beyond any discussion regarding the “note police,” I have done some research into the market in Los Angeles and can not find a note broker who is not licensed. I suspect that sellers of larger notes may take issue with one’s credibility if I were not to be licensed.

The pros and cons of licensing have been discussed numerous times on the Main News Group. The other benefit to licensing for note brokers in CA is the easing of restrictions regarding usury.

At any rate, I would be happy to be proven wrong on any or all of this.

Thank you very much for the quick response to my message.


Re: Roger Neal’s Courses on Note Creation? - Posted by David Butler

Posted by David Butler on January 10, 2001 at 13:35:13:

Hello Joe,

You are welcome… and let me commend you for following the first rule we have strongly suggested to everyone who has considered becoming active in the note business. Research the law… it is excellent drill for learning how to study, and to practice thinking for yourself. And I believe you could gain even further by visiting our messageboard and reviewing the various threads throughout the Archives that deal extensively with the subject - I believe you will gain some new insight on the matter… and in addition, perhaps gain a better understanding of my only concern about your recent post. Link is at:

I have no interest in proving you wrong. In fact, for yourself, I think you have come up with the answer that is right - FOR YOU. I say that only because the law is very gray in several areas in the first part, a lot depends on HOW the individual conducts his note activities in the second part, and finally I strongly believe it is squarely on the shoulders of the individual to research the issue and FORM HIS OWN OPINION of what HIS OWN comfort zone is with regard to the licensing issue, relative to the state, or state(s)he is operating in.

Be aware however that the law excludes up to 7 note acquistions in a calendar year, for resale to “the public” and “not as an investment”, during a calendar year; and/or up to 7 note “diposititions” by sale or exchanges “with the public” in a calendar year. It also excludes from the total deals, any “…transaction negotiated through a real estate licensee…” in determining the total deal count.
(B&P Code, Div. 4, Part 1., Ch. 3, Secs 10131 (d)(e) and 10131.1 (a)(b))

Although I have studied law to some length over the years, I too am not an attorney… but I can comfortably state that there is some tremendous room for hairsplitting in just that part of the applicable code, and some much better legally trained minds than mine have raised those issues frequently.

An important point however, and in your own way you have raised it, deals with the mention I made of “how” you conduct your business. The term “broker” in the note industry is a misnomer in many regards, inasmuch as many professionals operate more as note “dealers”, and can technically find “safe harbor” in the discussion above with regard to the exclusionary “hideouts”.

However, my interpretation of the code is clear on the subject of offering to “broker” a note as a representative of either a buyer or a seller “for a fee” as an act that would almost conclusively fall under the requirements for a real estate license, and most likely brings into play a fiduciary relationship and the “law of agency”, as I have mentioned in several of my posts on the subject.

Going back to the dealers, who “flip” notes, is where practioners have more leeway, as we have discussed above. Interesting to note however, that several states have included language such as “using the money of others, and not their own funds”, as acts that do require licensing in their jurisdiction.

Its a fairly large can of worms we are dealing with here… beyond that, a couple of other comments. I do deal with many, many folks who are not licensed in California or other states, some very prominent, and very skilled in the business - who both buy for their own accounts, and move paper upstream. Several here in California, have stated that they have spoken to DRE staffers and been told they were “legal” (and I have told them I believe they did not get accurate information, based on several recent California states’ Attorney Generals letter opinions on some of the issues).

I can conclusively state that many of the larger corporate buyers don’t much care… the general rule being the same best rule to follow period, whether one is licensed or not - professional competence and fair dealing ultimately carry the day.

And, unlike the pros and cons of whether one should get a license for real estate investing, I personally can think of no real cons in deciding whether or not to obtain a license for note dealing. It most likely can only make life easier I would think - but even there, it seems that is another area subject to personal preference. Fair enough? :wink:

Some important points to consider, and I think your thoughts on the matter help cover important ground every interested person should consider.

Good luck with your note investing endeavors, and have a profitable day!

David P. Butler