Georgia law provides that a person who does not have a real estate license cannot bring an action to collect a commission. Recently, the Georgia Court of Appeals invoked an exception to this rule and held that a person who does not have a real estate license has standing to sue as a referral agent. This ruling provides guidance on how the newer version of the law views commissions for unlicensed parties in a transaction.
In Oconee Investment Group, LLC v. Turk, 2017 Ga. App. Lexis 561, 807 S.E.2d 512, 2017 WL 4900571, the Court held that Turk can pursue a lawsuit for brokerage fees from Oconee. In the case, an agent of Oconee offered to sell multiple lots and trailers in a real estate development to Turk. Turk declined because she didn’t have the funds to purchase them. Oconee promised to give Turk one of the lots if she woud refer another purchaser to buy the remaining lots and trailers for a minimum pre-determined price. Turk found a purchaser, but Oconee refused to transfer the promised lot (or the equivalent amount of $20,000) to her. Oconee instead offered her a fee of $7200 or a credit toward the future purchase of a lot. Turk sued for breach of contract and unjust enrichment.
Oconee alleged that the case should be dismissed based on the statute that prevents an individual without a real estate license from having standing to recover a commission. Georgia law provides that “No person shall bring or maintain any action on the courts of this state for the collection of compensation for the performance of any of the acts mentioned in this chapter without alleging and proving that he was a licensed broker in Georgia at the time the alleged cause of action arose.” According to Oconee, Turk did not have a real estate brokerage license and thus her legal claims should be barred.
The Court disagreed. It found that an exception in the revised law applies here. The following factors exempted Turk from being precluded from suing for compensation as set forth in OCGA § 43-40-29(a): (i) Turk was acting as a referral agent and had no involvement in negotiations, document preparation, rent collection, property management or any other activity which goes beyond the mere referral of a name.; (ii) she received no fee from the party being referred to Oconee; (iii) she did not charge an advanced fee to Oconee; and (iv) she did not act as referral agent more than three times in one year.
This decision is not consistent with prior interpretations of the Georgia statute relating to brokerage licensing. It remains to be seen how other courts will resolve this matter.
The experienced team of attorneys at the Law Offices of Mark Weinstein, P.C. can help you litigate your real estate claims. Contact Mark Weinstein and his colleagues at (770) 888-7707 or visit them at http://www.markweinsteinlaw.com to find out how they can advise you.