Georgia Real Estate State Laws and Rules Extensive Study Guide

Georgia Real Estate Exam Prep: State Laws and Rules Study Guide

• The Georgia real estate licensing exam typically includes approximately $16$ questions specifically related to the state laws and rules governing the activities of licensees.

Unfair Trade Practices and Consumer Protection Acts

• Definition of Unfair Trade Practices: Deceptive, fraudulent, or unethical methods used to obtain business. These laws are designed to protect consumers from unlawful actions by licensees.
• Georgia Fair Business Practices Act (FBPA): Focuses on unfair and deceptive acts or practices, primarily related to advertising.   - Applicable to transactions involving the sale, lease, or rental of goods, services, or property.   - Directed at domestic consumer transactions rather than business-to-business transactions.   - Prohibits misleading or fraudulent advertising across all media platforms.   - Legal Requirement: The deceptive advertising must have had an impact on the entire public.   - Legal Requirement: A transaction must have actually occurred for prosecution to take place under this act.
• Georgia Uniform Deceptive Trade Practices Act (UDTPA): Targets price-fixing and practices that restrict free trade competition.   - Unlike the FBPA, no consumer transaction is required for a violation to occur.   - Entities that can sue: Consumers, brokers, or the state.   - Potential Penalties: Fines, injunctions, and triple damages (treble damages).
• Georgia Code Section 43-40-25: This specific code section addresses unfair trade practices specifically within the real estate industry.

Unfair Practices Related to Fair Housing

Licensees are prohibited from discriminating based on the seven federally protected classes: race, color, religion, sex, disability, familial status, and national origin. Prohibited actions include:

• Refusing to sell, rent, or negotiate for housing when a bona fide offer has been made.
• Discriminating in the terms, conditions, or privileges of sale or rental.
• Discriminating in the provision of services or facilities.
• Using advertising or marketing materials that indicate preference, restriction, or discrimination.
• Misrepresenting property availability for sale, rental, or inspection (claiming it is unavailable when it is not).
• Blockbusting: Suggesting or indicating that the demographics of an area are changing or will change to encourage or discourage real estate transactions.

Trust Fund Regulations and Unfair Practices

Trust funds refer to money belonging to others (e.g., earnest money, security deposits). Prohibited actions include:

• Handling trust funds in a negligent or improper manner.
• Failing to promptly turn over trust funds to the broker holding the licensee's license.
• Commingling: Mixing trust funds with the licensee’s personal funds.
• Failing to maintain trust funds in a separate, federally insured account at a financial institution.
• Using an escrow agent or custodian without the written agreement of all interested parties to an alternative method.
• Failing to obtain written agreement from all parties regarding the disposition of earned interest before depositing funds into an interest-bearing escrow account.

Advertising and Disclosure Violations

• Advertising Misconduct:   - Intentionally using deceptive, misleading, or inaccurate information.   - Failing to disclose license status in any advertisement.   - Placing a sign on a property without the owner’s written consent.   - Failing to remove signs within $10$ days after a listing expires.   - Running discriminatory advertisements.
• Filing/Recordkeeping Misconduct:   - Filing documents (like listing agreements or liens) for the sole purpose of creating a "cloud on the title."   - Misusing the word "appraisal" if the licensee is not a certified appraiser, or representing a Comparative Market Analysis (CMA) as an appraisal.   - Conducting business under a name not registered with the Georgia Real Estate Commission (GREC).
• Disclosure to Principals: Licensees must disclose in writing if they:   - Receive fees or rebates on expenses made on the principal's behalf for which they are reimbursed.   - Receive value for products or services referred to the principal as part of the transaction.   - Pay another broker for referring the principal for brokerage or relocation services.   - Fail to disclose that they are a principal in a transaction or have a personal interest/conflict of interest.

Compensation Regulations and Restrictions

• General Rule: Licensees may only accept commissions or valuable consideration from their own broker, unless the broker consents otherwise.
• Referral Restrictions:   - Licensees cannot pay unlicensed individuals for referrals.   - Licensees cannot pay unlicensed individuals for activities requiring a license.
• Exceptions for Payments to Unlicensed Parties:   - Paying earned compensation of a deceased licensee to their heirs or estate.   - Paying a citizen of another country for referral services if that country does not license real estate professionals, provided the Georgia licensee has written proof the payee is a citizen of that country, not a U.S. resident, and provides professional brokerage services in their home country.   - Payments from a brokerage firm to an unlicensed firm owned ($> 20\%$) by the licensee, provided: the brokerage has written evidence of the ownership, the licensee earned the commission on the brokerage's behalf, the unlicensed firm does not engage in real estate activities, and a written agreement authorizes the payment.
• Consumer Protection: Licensees must disclose to consumers if they are being referred to another licensee and a referral fee is involved.
• Consensual Changes: A licensee cannot change another licensee's compensation without prior written consent.

Contractual and Representation Standards

• Listing Agreements: Must have a definite expiration date; licensees must provide a copy to the seller.
• Offers and Closings:   - Licensees must promptly provide all parties with copies of a completed offer.   - Sellers must receive a copy of the closing statement.   - Buyers must receive a statement of all money submitted and its disbursement.
• Sales Contracts: Must include financing terms.
• Exclusive Agreements: Licensees cannot knowingly enter a brokerage agreement with a party who already has an exclusive agreement with another broker.
• Contractual Interference: Actively encouraging a client to break an existing agreement to sign a new one with the licensee is prohibited.
• Agency Disclosures:   - Unauthorized dual agency is prohibited (requires written consent).   - Agency relationships must be disclosed to all parties within a reasonable timeframe.
• Community Management: Management services for a community association require written permission from the association before selling or leasing a member's property.

Licensing Qualifications and Categories

• General Requirements: Applicants must possess a reputation for honesty, trustworthiness, integrity, and the capability to serve the public interest.
• Salesperson License Requirements:   - Residency: Georgia resident (or qualify as non-resident).   - Age: Minimum $18$ years old.   - Education: High school graduate or GED.   - Real Estate Education (one of the following):     - $75$ hours of pre-licensing coursework.     - $10$ quarter hours ($6$ semester hours) in real estate, real property, agency, or contracts from an accredited university or law school.     - Proof of completing $75$ hours of coursework in another state/Canadian province.   - Exam: Pass the state salesperson licensing exam.   - Sponsorship: Must affiliate with a broker.   - Background Check: Certified criminal history from Georgia Crime Information Center (GCIC) dated within $60$ days of application.
• Broker / Associate Broker License Requirements:   - Age: Minimum $21$ years old.   - Experience: Full-time salesperson for at least $3$ out of the previous $5$ years.   - Education (one of the following):     - $60$ hours of broker pre-license coursework.     - $15$ quarter hours ($9$ semester hours) in real estate, real property, agency, or contracts from accredited university or law school.     - Proof of completing $60$ hours of coursework in another state/Canadian province.   - Exam: Pass the state broker exam.
• Community Association Manager (CAM) License Requirements:   - Age: Minimum $18$ years old.   - Education: $25$ hours of pre-license coursework or equivalent university/law school credits ($4$ quarter/$2$ semester hours).

Post-Licensing and Continuing Education (CE)

• Post-License Course: Salespersons must complete a $25$-hour post-licensing course within the first year of licensure.   - This course counts as $9$ hours of CE for the first renewal cycle.   - Failure to complete results in a license lapse. A lapse longer than $6$ months requires penalty fees for reinstatement.
• Renewal Cycle: Licenses renew every $4$ years on the last day of the licensee’s birth month.
• CE Requirement: $36$ hours of continuing education per $4$-year period.   - Must include a $3$-hour mandated Georgia license law course.
• Lapsed Licenses:   - $< 2$ years: Pay back fees, reinstatement fee, and show completion of CE.   - $2$ to $5$ years: Pay fees and complete additional education requirements.   - More than $5$ years: Must retake pre-licensing courses and the exam.

Military Exam Credits

• Veterans: Receive a $5$-point credit on the exam.   - Requirement: served on active duty for $1$ year or longer with at least $90$ days during wartime/conflict and received an honorable discharge.
• Disabled Veterans: Receive a $10$-point credit.   - Requirement: Injury/illness in line of duty during wartime/conflict, incapacitation rated at $10\%$ or greater, and honorable discharge.
• Application: Points are added to total scores for Salesperson/CAM exams. For Broker exams, points are added to the Information Gathering and Decision Making section scores.

Georgia Real Estate Commission (GREC) Organization

• Membership: Comprised of $6$ members appointed by the Governor and approved by the Senate.   - Five members must be brokers with at least $5$ consecutive years of experience.   - One member is a member of the public.
• Terms and Operations:   - Members serve $5$-year terms.   - A quorum consists of $4$ members.   - GREC meets at least one day per month.   - Members receive a small per diem plus travel expenses.   - Licenses of members must be placed on inactive status during their term (no fees apply).
• GREC Staff:   - Employs a full-time, salaried Commissioner to oversee regulation.   - Commissioner and staff who are licensed must also place licenses on inactive status.   - GREC is self-sustaining, funded entirely by licensee fees, not tax dollars.
• Authority and Duties:   - Regulates license law; does not handle disputes over earnest money, commissions, or repairs (contract law matters).   - Maintains records for $5$ years.   - Issues an official seal for documents.   - Authorized to investigate applicants, licensees, and instructors.

The Investigation and Hearing Process

• Complaints: Requests for investigation must be in writing and sworn. The alleged action must have occurred within the past $3$ years.
• Injunctions: Filed by the Georgia Attorney General to stop potential violations that threaten public good.
• Process:   - Investigator gathers evidence (subpoenas, statements) and remains confidential.   - Filing of Case: Commissioner may dismiss, further investigate, or refer to the Attorney General.   - Hearing: Conducted by an Administrative Law Judge (ALJ) from the Office of State Administrative Hearings.
• Sanctions: Penalties for violations include:   - License denial, formal reprimand, suspension, or revocation.   - License downgrade (e.g., broker to salesperson).   - Fines: Up to $1,000$ per violation, capped at $5,000$ for multiple violations per hearing.   - Monitoring: Compulsory education or trust account audits.   - Misc: Fines of $100$ (e.g., failing to provide paperwork) or $500$ (e.g., failing to reconcile trust account monthly) via citations.
• Citations: An alternative to sanctions for minor issues; becomes final if no hearing is requested within $30$ days.
• Letters of Findings: Used when the violation did not harm a third party; confidential and not part of the public record.
• Misdemeanor Status: Violating license law is considered a misdemeanor crime.

Real Estate Education, Research, and Recovery Fund

• Purpose: Compensates consumers who win a judgment against a licensee but cannot collect damages.
• Maintenance: Must maintain a balance of at least $1,000,000$. Fees may be increased if it dips lower.
• Limitations:   - Deadline: Must file claim within $2$ years of the cause of action.   - Max Payment per transaction: $25,000$.   - Max Payment per individual: $25,000$.   - Max Payment per licensee: $75,000$.
• Licensee Consequences: License is suspended until the disbursement is repaid with interest.

Brokerage Relationships and Agreements

• Exclusive Engagements: Must be in writing and have a definite expiration date. Automatic renewals are prohibited.
• Fidelity Bonds: Required for brokers performing community association management who are responsible for more than $60,000$.   - Policy must name the association as additional insured.   - Must cover at least $3$ months of assessments plus reserves.   - Cancellation requires $30$ days' notice ($10$ days for nonpayment).
• Net Listings: Illegal in Georgia. Brokers cannot agree to a fee that is any amount above a specified sale price.
• Property Management Agreements: Must define identification, terms, compensation, deposit handling, and income/expense report schedules.

License Exemptions

Certain individuals do not require a license to perform specific real estate acts:

• Property owners (or their spouses/employees) selling/leasing their own property.
• Attorneys-at-law performing legal services.
• CPAs performing accounting services.
• Government employees on official duties.
• Utility company employees.
• Full-time property manager employees of an owner.
• Referral agents who: make no more than $3$ referrals per year, do not charge upfront fees, and receive no compensation from the person referred.
• Innkeepers Exemption: Management of properties for rent for $90$ days or fewer, provided the rooms are not permanent residences and no formal lease applies.

Occupational Tax and Business Brokerage

• Occupational Tax: Cities/counties can only require a fixed tax if the broker maintains an office in that jurisdiction.
• Gross Receipts Tax: Brokers can be assessed this tax in any city/county where commissions are earned, regardless of office location.
• Business Brokerage: Involves selling business interests. A real estate license is required if real property or lease transfers are involved. Credentials like ABI (Accredited Business Intermediary) or CBI (Certified Business Intermediary) may also be sought.

Required Notifications to GREC

• convictions: Must notify GREC within $10$ days of any civil, criminal, or administrative disposition.
• Changes: Must notify GREC within $30$ days of a change in address, employment, or trust account status.
• Transfers: Brokers must release a license to another broker even if the licensee is in violation or owes money.