Legal FAQs

Seth Weissman, GAR’s general counsel, frequently takes calls from REALTORS® across the state regarding legal matters in the real estate industry. This section contains some of the questions asked most frequently. The section is intended to provide helpful information to REALTORS®. It is not, however, intended as specific legal advice to REALTORS® or to any other person. Persons seeking such advice should consult an attorney. The answers to the questions set forth herein can change with the passage of time, the adoption of new laws, and the issuance of new court decisions. Please click on each topic to expand the content.

Georgia Law – Agency

Can a broker be one of the designated agents in a real estate transaction?
No. The Brokerage Relationships in Real Estate Transactions Act (“BRRETA”) defines a “Designated Agent” as one or more licensees affiliated with a broker who are assigned by the broker to represent solely one client to the exclusion of all other clients in the same transaction and to the exclusion of all other licensees affiliated with the broker.” (O.C.G.A. § 10-6A-3(9).) Since a designated agent is defined as a licensee of the broker, the broker cannot be one of the designated agents.

If I am identified in the sales contract as the broker for the buyer, do I still need to get a buyer brokerage agreement signed?
The general answer to this question is yes. The Brokerage Relationships in Real Estate Transactions Act (“BRRETA”) requires that a written brokerage engagement agreement be signed by the broker and his or her client to establish a client relationship. (See O.C.G.A. § 10-6A-3.) The brokerage engagement agreement must contain certain provisions which are not included in the GAR form purchase and sales agreements. Among other things, the brokerage engagement agreement must describe the types of agency relationships available through the broker and the terms under which the broker will receive a commission.

Can an agent working with a buyer as a customer be a “transaction broker” in a transaction where the agent is showing the buyer a listing of the brokerage firm with whom the agent is affiliated?
No. A transaction broker is a broker who does not represent either the buyer or the seller in the real estate transaction. Since the broker is representing the seller the broker’s agent would also be representing the seller.

Real Estate License Law

If I am a broker/builder, can I hire unlicensed individuals to exclusively sell my property if they are my full time employees?
No. Georgia law creates a few limited exceptions that persons performing brokerage activities be licensed. One of these is for a person employed on a full-time basis by the owner of property for the purpose of selling the real estate. (O.C.G.A. § 43-40-29(a)(8).) However, Georgia law also provides that this exception does not apply “to any person…who performs the acts of a broker” or to “any person who holds a real estate license.” (See O.C.G.A. § 43-40-29 (b) and (c).) These provisions have been interpreted by the Georgia Real Estate Commission to require all salespersons of a broker/owner to be licensed.

If a builder gives me a prize or bonus for selling his or her homes, does it belong to me or my broker?
If the prize or bonus is for performing brokerage services, the prize or bonus technically belongs to the broker. The broker would then be required to share it with the licensee based on the terms of the Independent Contractor Agreement with the broker. Georgia license law prohibits a licensee from “accepting a commission or other valuable consideration… from anyone other than the broker holding that licensee’s license without the consent of that broker.” (See O.C.G.A. § 43-40-25(b)(8).)

Do I have to disclose that I am getting a referral fee for referring a client to a broker in another part of the state or country?
Yes. Georgia license law provides that a licensee can be sanctioned for “Failing to obtain a person’s agreement to refer that person to another licensee for brokerage or relocation services” and informing that person “whether or not the licensee will receive a valuable consideration for the referral.” (See O.C.G.A. § 43-40-25(b)(35).)

Do I have to present an oral offer?
Yes. Under the Brokerage Relationships in Real Estate Transactions Act, a broker engaged by the buyer or seller must timely present all offers, whether written or oral, to or from the buyer or seller. (See O.C.G.A. § 10-6A-5 and O.C.G.A. § 10-GA-7.)

Must I get my broker’s permission to buy or lease property in my own name when I am not involving my broker in the deal?
Yes. The substantive regulations of the Georgia Real Estate Commission provide that no Licensee shall be permitted to buy or rent property in the Licensee’s own name without first advising in writing, the broker for whom the licensee is acting. (See O.C.G.A. § 520-1-.11.)

Can a licensed assistant work for two different licensees, each of whom works for a different broker?

Can a real estate broker close the sale of real estate in Georgia?
No. The Georgia Supreme Court has said that a real estate closing is the practice of law and can only be performed by an attorney.

As a listing broker, am I required to disclose if a murder or suicide took place in the home?
The answer to this question is no, unless you are asked. Georgia law provides that no cause of action shall arise against an owner of real property, a real estate broker or any affiliated licensee of the broker for failing to disclose that a person was murdered or committed suicide in a home unless those parties are asked. (See O.C.G.A. § 44-1-16.)

As a listing broker, am I required to disclose if a registered sex offender lives down the street?
No. Georgia law provides that no cause of action shall arise against an owner of real property, real estate broker, or affiliated licensee for failing to disclose any information which is included in the Georgia Violent Sex Offender Registry. (See. O.C.G.A. § 44-1-16.)

Is there a difference between fraud and misrepresentation?
Under Georgia law, fraud and misrepresentation are the same thing. There is not one claim for fraud and a separate claim for misrepresentation.

What is the maximum fine which can be levied by the Georgia Real Estate Commission?

Under state law, the Georgia Real Estate Commission can impose a fine not to exceed $1,000.00 for each violation of the Georgia License Law up to a maximum of $5,000.00 in any one citation (O.C.G.A. § 43-40-25.2). Unfortunately, the Commission will normally allege that every single improper behavior violates multiple portions of the license law and regulations. As such, it is fairly common for fines to exceed $1,000.00.

Georgia Law – Condos and Townhomes

What is the difference between a condominium and a townhome?
“Condominium” is a form of property ownership created when property is submitted to the Georgia Condominium Act. A condominium consists of Units that are individually owned, and common elements (typically including the land upon which Units are built, building foundation, roof and exterior, interior corridors, community center, recreation facilities, parking areas, etc.), which all of the unit owners own in common. Any type of construction can be submitted to the condominium form of ownership, including commercial property, parking buildings, or marina boat slips and townhomes.

“Townhome” refers to a type of construction in which a dwelling shares one or more walls with adjoining dwellings. A townhome development can be organized as a condominium or simply subjected to a set of covenants (often called a Declaration of Covenants, Conditions and Restrictions) designed to help protect property values. The later type of development is sometimes referred to as fee simple townhomes because the owners in such projects typically own the land underneath their townhomes in fee simple. In most townhome developments which are not organized as a condominium, there is still a townhome association composed of all of the townhome owners. The association often owns common property such as roads, walkways and recreational facilities benefiting the community as a whole.

Georgia Law – Contracts

Does a real estate sales contract automatically terminate if the buyer does not show up for the closing? 
No, unless the contract specifically provides otherwise. When a party fails to perform under a contract, the contract is terminable due to the breach by that party but is not automatically terminated. For the contract to be terminated, a formal notice of termination must be sent to the breaching party.

Can one spouse sign a contract for another spouse?
No. In Georgia, a person cannot sign a contract for another person unless they are legally authorized to do so. Being married does not give one spouse the legal authority to sign for the other. If a person wants to grant the person’s spouse the right to sign a contract on his or her behalf, he or she would need to sign a power of attorney granting that right.

Is there any consumer protection law where a buyer has a few days after singing a
contract to terminate it? 

With one exception, the answer to this question is no. However, the initial sale of a
condominium unit in Georgia is subject to a 7 day right of rescission on the part of the buyer commencing from the date that a binding contract is created and an acknowledgement is signed that they buyer has received the condominium disclosure package. (See O.C.G.A. § 44-3-111.)

Is a contract enforceable if the parties agree that the earnest money will be zero ($0) dollars? 
Yes. While there must be consideration for a contract to be enforceable the consideration can be the mutual promises of the parties to perform their respective obligations under the contract.

Can a party withdraw an offer to purchase or sell property even though the party agreed that it would remain open for a specified period of time? 
The general answer to this question is yes. A person making an offer or counteroffer can normally withdraw it at any time prior to it being accepted and returned to the party who made the offer. An exception to this rule, however, would be an option contract, where a party pays money or some other valuable consideration for the right to buy a property on set terms during a specified period.

What is the difference between the “Acceptance Date” and the “Binding Agreement Date” in the GAR form contracts? 
The Acceptance Date is the date that the party who has been presented with an offer or counteroffer signs and accepts it. However, a legally enforceable contract is not created until the accepted contract is then delivered back to the party who made the offer or counteroffer. The date this party (or the party’s broker if the broker is representing the party as a client) gets back the accepted contract is the Binding Agreement Date.

Can an offer be accepted after the time limit of the offer has expired? 
When a party accepts an offer after it has expired, and returns it to the party making the offer, it is technically a counteroffer rather than an acceptance. However, there is case law in Georgia which provides that if the counteroffer is then not signed, it can still be held to be an enforceable contract if both parties proceed in reliance on the contract as if it is in full force and effect.

Can members of the military get out of their leases if they are transferred to another party of the country? 
The answer is yes under both federal and state law. Under state law, if a member of the military enters into a residential lease for occupancy by that person or that person’s immediate family and subsequently receives permanent change of station orders or temporary duty orders for a period of more than 60 days, his or her liability is limited. In such cases, liability of the tenant may not exceed 30 days after written notice and proof of re-assignment are given to the landlord, plus the cost of repairing any damage caused by the act or omission of the tenant. (See O.C.G.A. § 44-7-22) Under federal law, a person who enters into a residential lease and thereafter enters military service may terminate the lease at any time after his or her entry into military service. If a member of the military enters into a lease while they are already in the military, and then receives either permanent change of station orders, or a temporary assignment elsewhere for a period of not less than 90 days, he or she may terminate the lease. Such termination will also terminate any liability on behalf of any co-tenant under the same lease. (See 50 App. USCA 534.)

Is there a limit on the term of a brokerage relationship? 
No. In theory, parties are free to enter into a brokerage relationship for as long a term as they want. Therefore, a seller could sign a seven year listing agreement. The Brokerage Relationship in Real Estate Transactions Act (“BRRETA”) places limits on the length of a brokerage agreement only if the agreement is silent on its duration. Specifically, BRRETA provides that if no expiration is provided, the agreement terminates “one year after initiation of the engagement.” The meaning of this phrase has yet to be interpreted by the courts in Georgia. A question exists regarding whether agreements with automatic renewal provisions provide for expiration. Some have argued that brokerage agreements must have a fixed date of expiration. They have made this argument based on two separate sections BRRETA. The first section says that the agreement ends on “any date of expiration agreed upon by the parties.” The second then provides that if no expiration is provided … one year after initiation of the engagement.” A different reading is that the brokerage agreement, of course, ends on any date of expiration agreed to by the parties, and that if there is no expiration at all, the agreement ends one year after it was entered into. This provides that it ends on a specific date, it therefore automatically ends after one year. This is a more expansive reading of the law and focuses on the fact that the specific section of the law limiting agreements to one year only applies if no expiration is provided at all rather than if no fixed expiration date is provided. To be safe, REALTORS® wishing to avoid arguments on this point should always, include an outside date of expiration even when there is an automatic renewal provision. So, for example, a listing would provide that it is for an initial term of one (1) year and shall automatically renew for successive one (1) year terms unless either party notifies the other not less than thirty days prior to the end of a renewal term. However, the agreement should, for example, then provide that notwithstanding the above, the agreement shall end five (5) years (or whatever specific period is agreeable) after the date it was entered into. In this way, the agreement has an absolute fixed date of expiration.

Federal Law – 1031 Exchanges

What is a “Section 1031 exchange”? 
Section 1031 refers to a section of the Internal Revenue Code. Click here to read more about this transaction of the Internal Revenue Service website.

Legal Terms and Phrases

Caveat emptor
The term “caveat emptor” is Latin for “buyer beware.” In Georgia, a buyer cannot maintain an action for fraud and misrepresentation against a seller unless the buyer can first show that he or she could not have prevented the fraud and misrepresentation through the exercise of ordinary and reasonable care. As such, Georgia is thought of as a state where caveat emptor is still the law of the land.

Deed, General Warranty
A General Warranty Deed is a deed used by sellers to convey property in which the seller warrants that the property is being sold free from title defects arising both before the seller bought the property and during the time the seller owner the property.

Deed, Limited Warranty 
A Limited Warranty Deed is a deed used by sellers to convey real property in which the seller only warrants that the property is being sold is free from title defects arising during the course of the seller’s ownership of the property. In other words, if there is a title defect in the property that arose before the current seller owned the property, the seller is not responsible for that defect.

Deed, Quit Claim 
A Quit Claim Deed is a deed used by sellers to convey real property in which the seller makes no warranties whatsoever with respect to the title to the property. In essence, the seller is saying that if he or she owns any interest in the property, that interest is being conveyed. However, if the seller does not own the property, or any interest therein, the buyer gets nothing.

et seq. 
The phrase “et seq.” is an abbreviation for the Latin phrase “et sequentes” which means “and the following.” Therefore a reference to a deed recorded in Deed Book 10, Page 15, et seq. means the first page and all those following until the end of the document.

Grandfather clause
A grandfather clause is one that allows someone who had the right to do something to continue doing it even though the law forbids it to others. REALTORS® often come across this phrase with regard to building codes which are regularly updated. Existing houses not built in accordance with the current code do not have to comply with the new code and are said to be “grandfathered.” The phrase “grandfather clause” has its origins in racially discriminatory practices in southern states at the end of the 19th century and in the early 20th century. The constitutions in many southern states (including Georgia) were amended to require the payment of poll taxes or the taking of literacy tests by all citizens. However, if the citizen’s forbears (or grandfathers) had the right to vote in 1866 or 1867, the citizen was exempted from having to pay the tax or take the test. This effectively disenfranchised African-Americans, Indians, immigrants and other minority groups. The phrase no longer has a racially discriminatory connotation and is instead used to refer to any laws or rules which are applied prospectively rather than retroactively.

Interpleader is generally thought of as a situation where two parties are both claiming the same money being held by a third party where the third party has no claim to the funds but is unsure which of the two parties is entitled to the funds. In such an instance, the party holding the funds can sue both claimants, deposit the funds into the registry of the court and ask the judge to decide who is entitled to the funds. Interpleader actions are often filed by real estate brokers when earnest money disputes cannot be resolved.

Liquidated damages
Liquidated damages are damages that the parties to a contract agree one of the parties will suffer if the other party breaches the contract. The agreement is made in advance of the party ever breaching the contract and are a reasonable pre-estimate of a party’s actual damages. In Georgia, an agreement to pay liquidated damages is generally enforceable if the provision is written properly. However, provisions for the payment of a monetary penalty are normally struck down by our courts as unenforceable.

Lis pendens
The term “lis pendens” is Latin for “pending lawsuit.” If a person files a lawsuit claiming an interest in a specific piece of real property, that person’s lawyers will normally file a Notice of Lis Pendens in the land records so that other potential buyers of the property are on notice of the claim. In this way, no buyer can claim that he or she didn’t know about the lawsuit and was thus an innocent purchaser for value. The filing of a Notice of Lis Pendens will almost always render the title to a property unmarketable pending the outcome of the lawsuit.

Short sale
A “short sale” occurs when the value of the property being sold is less than the total of the outstanding liens against the property, and the lender agrees to accept a “short” payment on the outstanding mortgage. The lender’s agreement is required before such a sale can

Specific performance
An action for “specific performance” is where a party to a contract sues to enforce the terms of the contract. In real estate, specific performance claims are normally brought by the buyer and seek judicial relief to order a seller to sell the property to the buyer. A claim for specific performance is brought when a party does not want damages for a breach of contract, but instead wants the terms of the contract enforced.