Froid

This appeal involves seven applications for payment from the Real Estate Education, Research and Recovery Fund (hereinafter Fund). The trial court granted recovery to two applicants but reduced their recovery by the amount of their tax writeoff. Five of the applicants were denied recovery on the ground that the realtor’s fraud had not involved licensed activity. All the applicants appeal from this judgment.

In 1972 Fred Niergarth, a licensed real estate broker, doing business as Investment Administrators entered into a lease option agreement with Gem Properties, whereby Niergarth obtained a lease with an option to purchase certain apartment buildings in Santa Clara County. He then formed about 17 limited partnerships, with himself the general partner of each, and sold limited partnership interests to a number of investors, including appellants.

Appellants Stanley Froid and Stephen Vitkovits purchased their interests through a salesman employed by Niergarth named John Karony. Appellants T. E. Sullivan, John Rebol, Herbert Madsen, Glenn Allen and Gustave Kadach (hereinafter the Kadach Group) purchased their interests directly from Niergarth.

Although it appears that…