Georgia’s laws about who can receive a commission in real estate transactions are pretty tough.
Under Georgia law, anyone who:
- intends or is promised to receive “any valuable consideration,”
- offers, agrees or actually negotiates or attempts to negotiate, or assists in procuring prospects, for the listing, sale, purchase, exchange, renting, lease, or option for any real estate or improvements thereon
must be a licensed real estate broker.
Anyone who acts as a real estate broker who does not have a license can be charged with a misdemeanor and/or fined. Among other penalties that can be imposed, anyone who acts as a real estate agent is prohibited from bringing an action in court to recover any alleged commissions or from filing a lien against the property to enforce a referral fee agreement.
All in all, the law makes it very difficult if not impossible for persons acting as brokers without a license to earn a commission or referral fee.
That is, with some very limited exceptions.
A Very Limited Exception.
There are some statutory exceptions to the rule of course. But a 2017 Georgia Court of Appeals case may have made it just a tiny bit easier for real estate investors by holding that an individual who did not hold a real estate broker’s license was not barred from pursuing a legal claim for a real estate referral fee.
The case addressed for the first time the issue of whether or not a “referral agent” can sue on an agreement for his/her referral fee. Although the court found in favor of the non-licensed real estate investor, the ruling is a VERY NARROW one. To come within the exception, you cannot negotiate the price, but only make the introduction/referral. If your actions go beyond the specific guidelines outlined, you will not qualify and you could potentially face penalties or even criminal prosecution for acting as a real estate broker without a license.
Further, there are exceptions to the exceptions which would still require you to hold a real estate license. The upshot is that for a very narrow niche of a certain type of investor, the ruling is favorable. However, the best and safest option is to obtain your license before acting as a real estate broker.
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