How to Syndicate an Apartment Deal in California: A Sponsor Guide
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To syndicate an apartment deal in California, you form the deal LLC (or register an outside LLC with the California Secretary of State), raise under Rule 506(b) or 506(c), and file a Form D notice with a $300 fee through NASAA's EFD for the Department of Financial Protection and Innovation, generally within 15 days of your first California sale. California then adds an LLC franchise tax, statewide rent caps and a property tax reassessment on a change in ownership or control.
This is the California version of our general syndication guide. It covers what changes when the building, the investors or both are in California. It is general information, not legal advice.
What is the California Rule 506 notice filing?
California treats Rule 506 interests as federal covered securities and wants a notice. You file the SEC Form D copy and the fee through the NASAA Electronic Filing Depository (EFD). DoorRaise's state data, from NASAA's fee schedule, lists the fee as $300, with no separate late fee listed. The common state deadline is 15 calendar days after the first sale in the state. The details, amendments and how California reads the filing are in California Rule 506 notice filing, and every state's fee is in blue sky fees by state.
How do you form the deal LLC in California, and what does it cost every year?
A California LLC is formed by filing Articles of Organization (Form LLC-1) with the Secretary of State, published at $70, then a Statement of Information (Form LLC-12) within 90 days, published at $20. An LLC formed elsewhere that does business in California registers on Form LLC-5, also published at $70. The costly part is the Franchise Tax Board: an LLC that is doing business in California pays a minimum franchise tax of $800 each year, plus an additional fee once California gross receipts pass a published threshold. Both the $800 minimum and the fee are explained in the California LLC tax and fee for apartment syndications. Confirm filing fees on the Secretary of State fee schedule before you file.
What California landlord and tenant rules should a sponsor know?
California's Tenant Protection Act (Civil Code 1946.2 and 1947.12) limits yearly rent increases to 5% plus local inflation, or 10%, whichever is lower, and requires just cause to end most tenancies after 12 months, with exemptions such as certain newer buildings; many cities, such as Los Angeles and San Francisco, add stricter local ordinances. A security deposit is generally capped at one month's rent and returned within 21 days (Civil Code 1950.5). A 3 day notice to pay or quit, not counting weekends and court holidays, starts a nonpayment case (Code of Civil Procedure 1161). Underwriting must assume the cap, not market rent growth. See rent control laws for apartment investors.
How does California property tax work when an apartment building sells?
Proposition 13 sets a base value from the purchase price and limits yearly growth in assessed value to 2%. A change in ownership resets the base to market value. For an LLC, a change in control also counts: when one person or entity acquires more than 50% of the LLC's interests, or original owners cumulatively transfer more than 50%, the property is reassessed (Revenue and Taxation Code 64), and the entity must report the change on the Board of Equalization form BOE-100-B within 90 days. A syndication that sells interests to many investors is usually not a change in control, but a later buyout or merger can be, so track transfers. See property tax reassessment in apartment underwriting.
How DoorRaise fits in
DoorRaise helps sponsors raise equity for apartment buildings from their friends and followers under Rule 506(b) or 506(c), with verified accredited investors only. Investors fund by wire into escrow. By default DoorRaise files the property's state notice; on new deals, the first investor from another state pays that state's filing fee by card when they sign, and later investors from that state pay nothing. See pricing or how it works.
FAQ
How much is the California Rule 506 notice fee?
$300, per NASAA's fee schedule. EFD shows the final amount before you pay.
What is the California LLC annual cost?
An $800 minimum franchise tax to the Franchise Tax Board, plus an additional fee at higher gross receipts and a Statement of Information every two years.
What is the California rent cap?
5% plus local inflation, or 10%, whichever is lower, for covered units.
Does adding investors trigger Prop 13 reassessment?
Not by itself. A reassessment follows a change in ownership or a change in control, such as one party acquiring more than 50% of the LLC.
Sources
- California Department of Financial Protection and Innovation
- NASAA: Form D fee schedule
- California Secretary of State: business fees
- California Franchise Tax Board: LLC filing fees
- California Civil Code, Sections 1946.2 and 1950.5
- California Board of Equalization: legal entity ownership program
This article is general information as of November 2026, not legal, tax or investment advice. State laws and fees change: confirm with the state agency and your own attorney before you file. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.