This guide walks the §10238 multi-lender note structuring framework from the lender-investor onboarding step through the broker-servicing setup.

Step 1: Confirm the lender-investor count against the ten-investor cap

The §10238 framework runs the lender-investor count cap at ten. The broker runs an investor inventory on the planned arrangement — the funding lender-investors and any assignees forecast against the loan term — and runs the count against the cap. A note structured against eleven or more lender-investors runs into the Corporate Code §25102(f) framework or a federal Regulation D framework, not §10238.

Step 2: Verify identical interests across the lender-investor base

The §10238 identical-interests requirement runs each lender-investor on the same priority, the same interest rate, the same payment terms, the same default rights, and the same prepayment rights. The broker runs the identical-interests verification on each lender-investor on the planned structure and runs the verification documented into the broker’s recordkeeping framework on the structuring cycle.

Step 3: Run the LTV check against §10238(h)

The §10238(h) LTV caps run against the security property type. The broker runs the appraisal framework against the property, runs the loan-to-value calculation against the appraised value, and runs the LTV check against the §10238(h) cap. A note structured against a property type-specific cap runs the structuring cycle through the §10238 framework.

Step 4: Calculate fractional ownership percentages

Each lender-investor runs a fractional ownership percentage on the note. The broker runs the percentages on the lender-investor’s funding-share basis — the percentage of principal funded by each lender-investor runs the lender-investor’s percentage on the note. The percentages aggregate to one hundred percent on the note and run the pro-rata distribution basis on principal, interest, late fees, prepayment penalties, and other note proceeds.

Step 5: Prepare the Lender/Purchaser Disclosure (RE 851A)

The broker prepares the RE 851A on each lender-investor on the funding cycle. The form runs the borrower’s identification, the property identification, the loan terms, the priority position, the appraisal framework, the loan-to-value ratio, the broker’s arrangement framework, and the lender-investor’s fractional ownership percentage. The broker runs the form in front of each lender-investor on the funding cycle and runs the signed-and-dated form into the broker’s recordkeeping framework.

Step 6: File the RE 860 Multi-Lender Notice

On the first multi-lender transaction in a twelve-month period, the broker runs the RE 860 Multi-Lender Notice filing against the Department of Real Estate within thirty days of the transaction. The filing runs the broker’s self-identification on the multi-lender activity against the Department and runs the broker into the §10238 reporting framework. The broker runs the filing receipt into the broker’s recordkeeping framework.

Step 7: Set up the §10145 trust account

The broker sets up the §10145-compliant trust account against the multi-lender note. The framework runs the Reg 2831 separate-records discipline, the Reg 2831.2 three-way reconciliation discipline, the Reg 2832 deposit-within-three-business-days discipline, and the Reg 2834 signatory framework. The broker runs the unlicensed-signatory fidelity bond framework against the trust account and runs the fidelity bond at the access ceiling on any unlicensed signatory.

Step 8: Engage the broker-servicing framework

The broker runs the servicing framework on the multi-lender note — the borrower-payment collection, the trust-account reconciliation, the pro-rata distribution to the lender-investor base, the §6050H Form 1098 reporting on the lender-investor share basis, the §1024.35 error-resolution file, the §1026.41 periodic statement where applicable, and the broker-level recordkeeping framework against the §10238 reporting framework. The broker engages a third-party servicer on the operational backbone or runs the framework against the broker’s in-house servicing operation.

Related Topics

• Multi-Lender Notes With Up to 10 Investors
• California Section 10238 Multi-Lender Loan Rules
• California Threshold-Broker §10232.4 CPA Inspection Trigger
• Fractional Note Distributions: The Pro-Rata Math
• Fidelity Bonds for Trust Account Signatories

This article is educational and does not constitute legal advice. The §10238 Multi-Lender Law runs under the California Department of Real Estate licensing framework — Cal Code Regs Title 10 §§2830–2835 and California Business and Professions Code §10238 on multi-lender loans — and runs alongside the §10145 trust-fund framework and the §10232.4 threshold-broker reporting framework. Consult qualified legal counsel and a qualified CPA on the specific structuring and disclosure requirements that apply to any California multi-lender note arrangement.

Sources

• California Business and Professions Code §10238 — Multi-Lender Law. California Legislative Information.
• California Business and Professions Code §10145 — Trust fund handling. California Legislative Information.
• California Corporations Code §25102 — Private offering exemption. California Legislative Information.
• California Department of Real Estate — Forms RE 851A, RE 851B, RE 851C, RE 860. California Department of Real Estate.
• California Code of Regulations Title 10 §2831.2 — Trust account reconciliation. California Department of Real Estate.