chapter 23. georgia real estate an introduction to the profession eighth edition chapter 23 georgia...

Chapter 23

Georgia Real Estate An Introduction to the Profession

Eighth Edition

Chapter 23

Georgia License Law

Key Terms• associate broker• broker• brokerage

agreement• commission• commissioner

• licensee• real estate• real estate

education, research and recovery fund

• salesperson

© 2015 OnCourse Learning

OverviewThis chapter covers Title 43, Chapter 40 of the Georgia Statutes and Codes, which relates specifically to real estate licensing.

License law is the law that the state used to protect the interests of its citizens from improper practice of licensees.


DefinitionsA broker is a person who, for compensation, does an act of real estate for another.

This could be negotiating contracts or procuring prospects for real estate transaction.


Definitions

An associate broker is a person, other than a salesperson, who acts on behalf of a real estate broker in performing acts of real estate.

An associate broker has a broker's license but chooses to work for another broker.


Definitions

A salesperson is licensed to perform acts of real estate on behalf of a broker.


DefinitionsA brokerage agreement is a written contract between a broker and client where the broker is hired to represent the interests of the client in the transaction and be compensated for doing so.


Definitions

The commission refers to the Georgia Real Estate Commission, and commissioner refers to the real estate commissioner.


Definitions

A licensee is any person with a real estate license, active or in active; a person could be an individual or firm, and a firm is any business entity such as a corporation, partnership, or limited liability company.


Definitions

Real estate is defined as any interest in real property, whether that interest be tangible or intangible, freehold or non-freehold, and would also include a mobile home it is permanently attached.


Creation of the Commission

The commission is composed of six members who are appointed by the governor for a five-year term, and approved by the Senate.



Five of the six members must be licensed in real estate for five years and residents of Georgia for five years.



The six-member is a consumer member who cannot have any connection with the real estate industry and who has a recognized interest in consumer affairs.



In the event of vacancy occurs, the governor shall appoint a person to fill the unexpired term.



The commission appoints a chairperson each year.



The governor is able to remove members for their inability to perform, negligence to perform, incompetence, dishonest conduct or for having disciplinary sanctions imposed upon them by any licensing agency.



The license law empowers the commission to pass rules and regulations relating to the professional conduct of licensees.


Determination of Fees

The commission does not receive tax support.

The commission establishes and collects fees to cover the cost of its operation.


Office of Commissioner

The commissioner is a full-time employee of the commission.

It is the commissioner's job to run the department on a daily basis. The commissioner hires and is responsible for the staff.


Status of Commission Employees

While an employee of the commission, no licensee is allowed to maintain an active real estate license.


Seal and Records

The commission shall be able to certify the license history of a licensee for five years.


Application for Licenses

The licensee’s name, license number, license status and any disciplinary information is available to the general public through the real estate commissioner's website.


Qualifications of LicenseesTo qualified for a community association manager’s license:• 18 years old• Resident of the state• High school graduate or GED

equivalent• Complete a 25-hour community

association manager's course• Pass the state exam


Qualifications of Licensees

To qualified for a salesperson’s license:• 18 years old• Resident of the state• High school graduate or GED

equivalent• Complete a 75-hour salesperson's

course• Pass the state exam



Each licensee must also complete a 25-hour post-license course within one year of activating their license.

If the post-license course is not completed within one year, the license will lapse.



To qualified for a broker’s license:• 21 years old• Resident of the state• High school graduate or GED

equivalent• Complete a 60-hour broker's course• Pass the state exam



All licensees must complete six hours of continuing education per year of the renewal period.


Nonresident Licenses

Licensees do not have to be residents of Georgia.

A person who is not licensed in their state may obtain a Georgia real estate license by meeting the same age, education, and exam requirements of a resident licensee.



A person who is licensed in their own state may also obtain a Georgia real estate license.


Nonresident License Requirements

Requirements include:• Providing proof of licensure in their

own state• Paying fees• Stating in writing that they have read

the laws, rules, and regulations and agrees to abide by them


Nonresident License Requirements• Affiliates with a broker• Provides documentation with copies

of disciplinary action• Appoints the real estate

commissioner as agent to receive legal notices on their behalf

• Provides a written agreement that the licensee will cooperate with investigations by the commission



License law also allows a licensee from another state to enter into a written agreement with the Georgia broker, which would allow the out-of-state licensee to practice in Georgia without a license.


Nonresident LicensesThe written agreement shall include:• How commissions will be split

between the Georgia broker and the out-of-state licensee

• Any listings or management agreements to be in the name of the Georgia broker

• The out-of-state licensee will conduct negotiations only with the express permission of the Georgia broker


Nonresident LicensesThe written agreement shall include:• Any advertising identifies the

Georgia broker• Any contracts identify the Georgia

broker• Any trust funds to be held in the

Georgia broker’s trust account unless all parties agree in writing to the contrary



The commission is limited to suspending or revoking the Georgia broker’s rights to enter into further agreements with out-of-state brokers.


Granting of a Broker’s License

To be issued a broker’s license to a firm, the firm is required to designate an individual licensed as a broker to be its qualifying broker, and the qualifying broker should have the authority to bind the firm in cases before the commission.


Granting of a Broker’s LicenseThe qualifying broker will be responsible for making sure that the firm and all licensees comply with the law and rules.

The qualifying broker is responsible for making sure that all persons acting as licensees for the firm are properly licensed.


Fees

Nonrefundable fees:• Examination fee• Activation fee• Renewal fees

Real estate licenses are renewed by the last day of the birth month every

four years.


Fees

If a license lapse is due to failure to pay fees, the licensee may reinstate the license within two years of the lapse by paying all renewal fees, late charges, and a reinstatement fee.


FeesIf the lapse is greater than two years but less than five years, the licensee may reinstate the license by paying all renewal fees, late charges and a reinstatement fee.

The licensee must also complete the pre-license course for the license to be reinstated.


Fees

If the lapse is more than five years, the licensee must requalify as an original applicant, taking the pre-license course and state exam.


Inactive Status

If a person does not wish to continue to be actively licensed, they may make a written request to have their license placed in an inactive status.


Inactive Status

This request must be made within 30 days of ceasing work for a broker.

While inactive, the licensee may not engage in any brokerage activity except for property the licensee owns.


Inactive Status

While inactive, the license must be renewed every four years, with renewal fees being paid to the commission.


Inactive Status

To reactivate, the licensee must complete continuing education courses equal to what would have been required if the licensee had maintained an active license.


Penalty FeesPenalty fees maybe imposed on a licensee who submits a check with insufficient funds or who fails to notify the commission of a change of address, the opening or closing of the trust account, transfer to a new company, or departure from a firm to go inactive.

These notifications must be made within 30 days.


Disposition of Fees

Fees collected by the commission shall be deposited in the state treasury.

Expenses of the commission shall be paid from these funds.


Disposition of Fees

The expense of the commission shall not be supported by state tax dollars.

The commission must be self-supporting.


Power of Commission to Issue, Revoke, Suspend and Censure

The commission is empowered to regulate the issuance of licenses, revoke or suspend licenses, and censure licensees.


Granting, Revoking and Suspending Licenses

For the commission to grant a license to a person, the individual shall have a reputation for honesty, trustworthiness, integrity and competence to do business in such as manner as to safeguard the interest of the public.


Granting, Revoking and Suspending LicensesThe commission may deny a license to a company if a stockholder, member, or partner with more than 20% ownership of the company does not have a good reputation for honesty, trustworthiness, and integrity, or if such person has been convicted of any crimes.



A license can be refused if a licensee is guilty of forgery, embezzlement, obtaining money under false pretenses, theft, extortion, conspiracy to defraud and other like offenses.


Granting, Revoking and Suspending LicensesNo one who has a conviction may be eligible to apply for a license until all terms of sentence have been completed and at least two years have passed since the end of the term for a single conviction; or

five years have passed since the end of the term for multiple convictions.


Granting, Revoking and Suspending LicensesAn applicant for an associate broker or broker license who has been convicted of an offense cannot be licensed by the commission until:• At least 10 years have passed since

the conviction or release • There are no criminal charges

pending


Granting, Revoking and Suspending LicensesAn applicant for an associate broker or broker license who has been convicted of an offense cannot be licensed by the commission until:• Provides proof that they now have a

reputation for honesty, trustworthiness, integrity, and confidence, and will do business in such a manner as to safeguard the interest of the public



Making false statements on the application is grounds for refusal to issue, suspend or revoke.



A person who is perceived to have falsified the application would not be considered to have a reputation for honesty, trustworthiness, and integrity or to demonstrate competency to safeguard the interest of the public.



Any sanctioned by an occupational body of this or any other state can also be sufficient grounds to refusal to issue.



Upon conviction of any crimes, the licensee must immediately notify the commission of the conviction.

The license shall be automatically revoked in 60 days unless the licensee makes a written request for hearing.



The commission can also refuse to issue a license or suspend a license if someone is not in compliance with a child support order or is in default on a student loan.


Refusal to Issue

If the commission refuses to issue a license after proper application, the commission must provide for a hearing.


Management of Firms and Licensed Affiliates

Every brokerage firm must have a broker or qualifying broker.



This person shall be responsible for the acts of the firm and its licensees and is responsible for violations unless the broker can demonstrate that they had procedures for supervision, did not participate in any violation, and did not ratify the violation.



If the firm is a sole proprietorship, the firm must be entirely owned by the broker.

If the firm is a partnership or limited partnership, the qualifying broker must be a general partner.



If the firm is a limited liability company, the qualifying broker must be a member.

If the firm is a corporation, the qualifying broker must be an officer.



The broker or qualifying broker must have the ability to sign on all trust accounts maintained by the firm.



The firm must establish the following procedures:• Ensure that all advertising is in

compliance with laws and rules• Provide training to licensees on the

law and rules



The firm must establish the following procedures:• Provide for a review all offers and

contracts within 30 days of the date of offer or contract

• Conduct an ongoing review of the firm’s trust account procedures



The firm must establish the following procedures:• Provide assurance that all personnel

performing acts of a licensee are properly licensed

• Make sure trust disbursements are properly made



The firm must establish the following procedures:• Retain copies of all transaction

records• Provide a written policy and

procedures manual to all licensees


Management of Firms and Licensed AffiliatesThe firm must establish the following procedures:• Provide a written agreement with all

licensees that states how the licensee will be compensated for work while with the broker and how the licensee will be compensated for work not completed before leaving the broker



The commission will not arbitrate commission disputes.



The firm must establish the following procedures:• Ensure that a person with

management authority for the firm is reasonably available


Change of Place of Business

When a firm changes its address, it must notify the commission, in writing, within 30 days.



When a licensee leaves a broker, the broker is required to forward the license to the commission or to the new broker.



If a licensee leaves a broker and has transactions that have begun but not yet completed, the licensee may continue to act for the former broker under the following conditions:



• The brokers agree in writing• The transactions are specifically

identified• The former broker accepts full

responsibility for the licensee’s activities on the transactions

• The agreement states the form of compensation


Trust AccountsA broker who takes money belonging to others, such as earnest money, security deposits and rents, must maintain an escrow account which is not subject to garnishment or attachment.


Trust Accounts

Once deposited, the broker cannot use that money as fee or commission until the transaction is consummated or terminated.


Trust AccountsIf a broker does not accept money belong to others, they are not required to maintain an escrow account.

They must open an escrow account within one day of receiving funds.


Trust Accounts

Brokers may maintain as many trust accounts as they wish so long as they notify the commission of the proper information.


Trust Accounts

Any time a broker opens an account, the they must notify the commission of the name of the bank and the account number.


Trust Accounts

Any broker with an escrow account must allow the commission to audit the account any time the commission has reasonable cause.

The commission is required to audit each broker’s account at least one time each renewal period.


Trust Accounts

The commission may accept a report from a CPA that the account is maintained in accordance with the law.


Trust Accounts

A nonresident broker may maintain a trust account in their resident state so long as the commission has the authority to audit it.


Trust Accounts

If the licensee has their own trust account, the account must be approved by the broker, the broker must notify the commission of the account and the licensee must provide, on a quarterly basis, a reconciliation of the trust account.


Real Estate Education, Research and Recovery Fund

The real estate education, research and recovery fund was created to protect the public against the illegal practices of brokers.



The fund is maintained by a $20 fee all new licensees pay into the fund at the time of initial application for a license.

The fund must maintain a minimum balance of $1,000,000.



If the fund falls below $1,000,000, each licensee will be assessed up to $30 for each year at the time of renewal.


Real Estate Education, Research and Recovery Fund• The fund will not pay more than

$25,000 for any one transaction.• The fund will not pay more than

$75,000 for any one licensee.• No one person will ever receive more

than $25,000 from the fund.



If someone has been harmed by a licensee, they must first take action against them and receive a judgment.



Only upon failure to receive payment from the licensee using all appropriate actions available will they be able to ask a court to order the commission to pay from the recovery fund.


Real Estate Education, Research and Recovery FundLicensees, their spouses, siblings and children are not eligible to receive money from the fund.

Should the commission be required to pay from the fund, the license of the licensee shall be automatically revoked.



The licensee may not be eligible for a new license unless the licensee makes full restitution to the fund, including interest.


Requirements to Bring Action

Any person who brings an action against someone else for the payment of commission must first prove that they were properly licensed at the time of the cause of action.


Unfair Trade Practices Sanctions

The unfair trade practices section sets forth a code of conduct for licensees in the protection of the public.

Any person violating these practices can be sanctioned in the following ways:


Unfair Trade Practices Sanctions• Refusal to grant or renew a license• Formal reprimand• Suspension of license• Revocation of license, which is

permanent• Revocation of a broker or associate

broker license with issuance of a salesperson’s license


Unfair Trade Practices Sanctions• Reimburse for expenses incurred in

an investigation• Fine not to exceed $1,000 per

violation and not more than $5,000 per hearing

• Education requirements• Filing of periodic reports by an

accountant• Limits or restrictions of the licensee

to protect the public© 2015 OnCourse Learning

Unfair Trade Practice Violations1. Treating people differently because

of race, color, religion, sex, disability, familial status or national origin.

2. Advertising in a way that is intentionally misleading or inaccurate


Unfair Trade Practice Violations3. Failing to account for

money that belongs to other

4. Commingling a licensee’s money with that of a principal


Unfair Trade Practice Violations

5. Failure to deposit funds as soon as possible

6. Accepting, giving or charging undisclosed fees


Unfair Trade Practice Violations7. Representing a

broker other than the broker holding the license without permission

8. Accepting commissions from anyone other than the broker without consent of the broker © 2015 OnCourse Learning

Unfair Trade Practice Violations9. Failure to disclose

license as a principal. If you have to ask whether you have to disclose, the answer is yes.

10.Guaranteeing a profit


Unfair Trade Practice Violations11.Placing a sign

without written permission. Removing a sign within 10 days of expiration

12.Offering property for sale without the permission of the owner


Unfair Trade Practice Violations13.Inducing a person to

break a contract to enter into another contract

14.Negotiating directly with the client of another broker without permission


Unfair Trade Practice Violations15.Expressing an

opinion as an appraisal without having an appraiser license

16.Acting as a licensee in another state without a license in that state


Unfair Trade Practice Violations17.Compensating a

person for real estate activities if that person does not have a real estate license

18.Listing without a termination date


Unfair Trade Practice Violations19.Failure to give

copies of any offers or contracts to all parties.

20.Failure to provide a closing statement to all parties



21.Any substantial misrepresentation

22.Dual agency without written consent



23.Failure to turn over funds to the broker as soon as possible

24.Clouding a title to a property without a valid claim


Unfair Trade Practice Violations25.Conduct that demonstrates

dishonest dealings or incompetence to safeguard the public

26.Entering into an agreement or contract when an exclusive brokerage engagement exists with another broker



27.Failure to maintain copies of all documents for 3 years

28.Falsification of any document



29.Depositing money into an interest-bearing escrow account without written agreement from all parties as to who receives the interest

30.Failure to disclose agency relationships in a timely fashion



31.Performing acts of a broker or salesperson with only a CAM license

32.When performing CAM duties, failure to obtain permission to perform other acts of real estate


Unfair Trade Practice Violations33.Accounting of all

records within 30 days of termination – CAM

34.Accounting of all records within 30 days of termination – Property manager


Unfair Trade Practice Violations35.Changing the compensation of

another licensee without prior written permission

36.Failure to disclose to a person that they are being referred and whether or not a referral fee will be paid for the referral



The commission may consider previous sanctions imposed on the licensee by the commission in determining the severity of new sanctions.



Licensees are allowed to complete pre-printed contracts so long as they were prepared by an attorney.

This shall not be considered the practice of law.



Licensees must not give legal advice.



When completing a lease or offer to buy, sell, lease, rent or exchange real estate, a licensee is required to include a method of payment, a legal description, special stipulations as required and dates to make sure the parties meet their responsibilities.


Hearings

The commission will provide a licensee with the opportunity of a hearing before censuring the licensee or suspending or revoking the license.

If a person disagrees with the findings, they are entitled to a judicial review.


Investigation of Complaints

The commission SHALL investigate upon a sworn written request of any person the actions of any licensee, instructor, or applicant for license.


Injunctive Actions

The attorney general can bring an injunctive action to stop acts and practices that the commission deems violates or will violate the license law.


Exceptions

The following are exceptions allowing a person to do acts of real estate for another without obtaining a license:


Exceptions

• Property owner, spouse or general partner of a limited partnership

• An attorney-in-fact• Practicing attorney• Administrator, executor or guardian• Government employee• Utility employee


Exceptions• Full-time employee of the owner of

the property• Referral agent, with less than three

transactions per year• Employee of a broker with a

management agreement with the property owner

• Property management services for property available for less than 90 days


Exceptions

• Community association services provided by a member of the association

• Physical maintenance on property• Certified public accountant acting as

an accountant


Exceptions

A licensee who wishes to performs acts of real estate as an employee of the owner, such as a builder or developer, must surrender the license before providing brokerage services for the owner.


Acting Without a License

The commission is empowered to issue a cease and desist order to anyone providing acts as a real estate licensee without a license.


Acting Without a License

Fines are not to exceed $1,000 per violation, with each day of practice without a license being a separate violation.


Penalty

Any person found guilty of violating the provisions of the license law shall be guilty of a misdemeanor.


chapter 23. georgia real estate an introduction to the profession eighth edition chapter 23 georgia...

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