Bock

In California, a loan secured by a lien on real property is exempt from the constitutional prohibition on usury if the loan is made or arranged by a licensed real estate broker. (Cal. Const., art. XV, § 1; Civ. Code, § 1916.1.) Section 1916.1 explains that “a loan ... is arranged by a person licensed as a real estate broker when the broker . . . acts for compensation or in expectation of compensation for soliciting, negotiating, or arranging the loan for another . . . .”

In this case, we conclude that even when the lender on such a loan is a corporation that is wholly owned by the arranging broker, the broker can still be found to have arranged the loan “for another” for purposes of section 1916.1. We also conclude that in such a situation, the broker may be found to have arranged the loan “in expectation of compensation” even if the only compensation the broker will receive is the profit his wholly owned corporation reaps from the interest on the loan. Based on these conclusions, we affirm the judgment here.

FACTUAL AND PROCEDURAL BACKGROUND

When plaintiff Gregory W. Bock, trustee of the Bock Family Trust, needed a loan, a third party put him in contact with defendant…