Commission: No License, No Lexus, No Problem

Posted by Charles H. Van Horn on

I have written previously a variety of topics confronted in a real estate transaction, including selecting a real estate broker to represent you. In a landmark decision issued last week, the Georgia Court of Appeals ruled a person who does not have a real estate license may sue for a commission. This upsets a long line of court decisions. The General Assembly enacted a statute prohibiting a real estate commission to be paid to anyone who does not have a real estate license. The law has a few narrow exceptions, none of which were applicable to this recent court decision.

In the case, a developer looking to sell a series of lots and trailers agreed to give a person (without a real estate license) a specific lot and a trailer if she referred a purchaser for the other lots. The individual found the developer a purchaser. The developer did not follow through. The referring person sued. In response, the developer cited the Georgia statute limiting real estate commissions (including referral fees) to only those with a real estate license.

The Georgia Court of Appeals determined the referring person was able to pursue her claim for the referral fee she negotiated. This decision is a massive departure from long-standing rules.  If this ruling stands, the repercussions are quite broad. Will this open the door for many “referral” type claims for payment based on a successful introduction?