California · Government Code

GOV §5951: It is unlawful for any person to offer or sell in an issuer transaction in this state, or otherwise knowingly to offer or sell in this state, any security constituting a fractional interest in a lease

Civil

What this law says, in plain English

It is unlawful to offer or sell fractional interests in local agency leases or obligations without prior written consent, subject to specified exceptions for registered securities, institutional investors, and certain prior transactions.

Read the full statutory text

It is unlawful for any person to offer or sell in an issuer transaction in this state, or otherwise knowingly to offer or sell in this state, any security constituting a fractional interest in a lease, installment sale, or other obligation of a local agency without obtaining the prior written consent of that local agency to that offer or sale. However, this section shall not apply to any of the following: (a) Any security that constitutes a fractional interest in a lease, installment sale, or other obligation of a local agency and that was first issued and sold prior to October 2, 1993. (b) Offers or sales of shares or interests in any registered unit investment trust or management company, each as defined in the Investment Company Act of 1940. (c) Any security that constitutes a fractional interest in a lease, installment sale, or other obligation of a local agency and that is registered under the Securities Act of 1933. (d) Offers or sales of any security described in this section subsequent to an offer or sale of that security in compliance with this section. (e) Offers or sales of participation interests between financial institutions. (f) Any security that constitutes a fractional interest in a lease, installment sale, or other obligation of a local agency and that is created concurrently with, and as an integral part of, a financing to which the local agency is a party. (g) Offers or sales of any security that constitutes a fractional interest in a lease, installment sale, or other obligation of a local agency made solely to one or more persons who are reasonably believed to be qualified institutional buyers or accredited investors. (h) Any security that was first issued and sold prior to the effective date of this section if that security is either described in subdivision (b), (c), or (f), or was issued and sold in a transaction described in subdivision (d), (e), or (g).

Verify at the official source: California legislative text

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This page is legal information, not legal advice. Code text is sourced from official publications and may lag amendments — always confirm at the official source linked above. Plain-English summaries and relationship data are AI-derived and reviewed on an ongoing basis; verify with a licensed attorney before acting.