O.C.G.A. § 43-40-24 (2019)

Annotations

Law reviews. - For annual survey on real property law, see 70 Mercer L. Rev. 209 (2018).

JUDICIAL DECISIONS ANALYSIS GENERAL CONSIDERATION LICENSURE REQUIREMENTS IN ACTIONS FOR COMPENSATION LICENSURE REQUIREMENTS FOR NONRESIDENTS

General Consideration Editor’s notes. - In light of the similarity of the statutory provisions, decisions under former Civil Code 1910, § 1896, and former Code 1933, §§ 84-1410 and 84-1413, as they read prior to the revision of the chapter by Ga. L. 1973, p. 100, are included in the annotations for this Code section. Legislative intent to prevent illegal contract actions. - Principal purpose of the legislature in enacting these provisions was to prohibit the use of the courts for the purpose of enforcing an illegal contract, whether it knew that such was already the law or not. Drake v. Parkman, 79 Ga. App. 679, 54 S.E.2d 714 (1949) (decided under former Code 1933, § 84-1413). Because Georgia’s statutory scheme regulating brokers was enacted pursuant to the state’s police power to protect the public interest, an agreement to pay a brokerage fee, entered into with an unlicensed broker, is void and unenforceable. Amend v. 485 Props., LLC, 401 F.3d 1255 (11th Cir. 2005). Application applies only to realtors, not insurance agents. - Rule that a real estate broker must allege in an action brought to recover commissions that the broker is licensed to pursue that vocation is prescribed by statute and is applicable only to actions instituted by real estate brokers. No statute requires an insurance agent suing for premiums on a policy furnished to the broker’s customers to allege either that the broker is a licensed insurance agent or that the insurance company from which the policy is procured is qualified to carry on business in this state. Gilder v. Moore, 93 Ga. App. 448, 91 S.E.2d 834 (1956) (decided under former Code 1933, § 84-1413). When broker entitled to commission. - Real estate broker is entitled to the broker’s commission if the broker either effects the sale or was the procuring cause which culminated in the sale. Newman v. James M. Vardaman & Co., 162 Ga. App. 878, 293 S.E.2d 462 (1982). Whether or not the plaintiff is in compliance with O.C.G.A. §§ 43-40-11 and 43-40-18 has no bearing on the plaintiff ’s ability to collect a commission under

O.C.G.A. § 43-40-24. Newman v. James M. Vardaman & Co., 162 Ga. App. 878, 293 S.E.2d 462 (1982). Question of fact. - Whether or not real estate broker was procuring cause of ultimate sale is a question of fact for the jury. Newman v. James M. Vardaman & Co., 162 Ga. App. 878, 293 S.E.2d 462 (1982). What broker must prove to show broker caused sale. - In determining whether or not a real estate broker is procuring cause of sale when there is no exclusive contract to sell, the broker must show and prove that there were negotiations still pending between the broker and prospective purchaser and that the owner was aware that negotiations were still pending at the time the broker consummated the sale. Gibbs v. Nixon, 154 Ga. App. 463, 268 S.E.2d 670 (1980). Final act of closing sale is not necessarily condition precedent to broker’s right to commission as when the broker has secured a binding contract of sale. Northside Realty Assocs. v. MPI Corp., 245 Ga. 321, 265 S.E.2d 11 (1980). Significant time was that point in time when the alleged cause of action arose. Bryan v. Brown Childs Realty Co., 252 Ga. App. 502, 556 S.E.2d 554 (2001). Section 43-40-24 does not involve actions against broker. - In enacting former Code 1933, § 84-1413, the legislature was legislating concerning affirmative efforts of a broker or salesperson to recover, and did not intend to deal expressly or impliedly with the rights of the other party dealing with the broker or salesperson to recover moneys paid or to deal with broker’s or salesperson’s defensive rights in action against the other party. Drake v. Parkman, 79 Ga. App. 679, 54 S.E.2d 714 (1949) (decided under former Code 1933, § 84-1413). Former Code 1933, § 84-1413 applied even if claim is on quantum meruit basis. Dixon v. Rollins, 120 Ga. App. 557, 171 S.E.2d 646 (1969) (decided under former Code 1933, § 84-1413). But see Stokes & Co. v. McCoy, 212 Ga. 78, 90 S.E.2d 404 (1955). Cited in Citizens & S. Nat’l Bank v. AVCO Fin. Servs., Inc., 129 Ga. App. 605, 200 S.E.2d 309 (1973); Killingsworth v.

General Consideration (Cont’d) French & Whitten Realtors, 148 Ga. App. 29, 251 S.E.2d 40 (1978); Berchenko v. Fulton Fed. Sav. & Loan Ass’n, 149 Ga. App. 526, 254 S.E.2d 745 (1979); Chase & Taylor, Inc. v. Milam, 179 Ga. App. 844, 348 S.E.2d 74 (1986); Unifund Gen., Inc. v. Orr, 191 Ga. App. 836, 383 S.E.2d 199 (1989). Licensure Requirements in Actions for Compensation No unlicensed person shall maintain action for compensation for performing any acts mentioned in statute. Krizan v. Newman & Co., 246 Ga. 214, 271 S.E.2d 135 (1980); Johnson v. Oriental Weavers Rug Mfg. Co., 241 Ga. App. 15, 525 S.E.2d 738 (1999). Party not licensed as a real estate broker but only authorized as a real estate agent could not bring an action for a real estate sales commission and tortious interference with business relations. Atlanta Apt. Inv., Inc. v. N.Y. Life Ins. Co., 220 Ga. App. 595, 469 S.E.2d 831 (1996). Section 43-40-24 inapplicable to suit for collection of promissory note. - If a person who has acted as a real estate broker or salesperson wishes to bring suit to enforce rights under brokerage or salesperson’s contract, then the broker or salesperson must comply with the requirement of this section; but if contract being sued upon is a promissory note and not the brokerage or salesperson’s contract, the suit is not one for collection of compensation for performance of any acts mentioned in the statute, but is a suit to enforce obligations of the note and is governed by provisions of the Uniform Commercial Code. Azar-Beard & Assocs. v. Wallace, 146 Ga. App. 671, 247 S.E.2d 154 (1978). Failure to allege license now not fatal to cause of action. - While prior to the adoption of the Civil Practice Act (see now O.C.G.A. T. 9, C. 11) failure to allege as required by Ga. L. 1973, p. 100, § 1 (see now O.C.G.A. § 43-40-24(a)) was fatal, this is no longer the case. Brown v. Jackson, 142 Ga. App. 780, 237 S.E.2d 13 (1977).

Salesperson must prove license to win commission action. - In real estate salesperson’s action to recover commissions, it is a condition precedent to recovery that the plaintiff prove possession of necessary license, and failure to do so requires the grant of a new trial. Beets v. Padgett, 123 Ga. App. 68, 179 S.E.2d 560 (1970) (decided under former Code 1933, § 84-1410). Time of proof of license. - Civil Practice Act, O.C.G.A. T. 9, C. 11 does not require a person suing on a contract permitted to be entered only by licensed persons to plead the existence of such a license in order to state a claim, but, at whatever stage of the proceedings it appears that the plaintiff is seeking to recover upon a contract permitted to be entered into only by persons holding licenses issued as a regulatory measure, it becomes imperative for the plaintiff to prove possession of such a license and that the plaintiff held such license at the time the contract was entered into in order to authorize a recovery. Myers v. Wynn, 201 Ga. App. 764, 412 S.E.2d 581 (1991). Because the broker’s license was returned to active status prior to the arising of the cause of action for a commission, O.C.G.A. § 43-40-24(b) did not bar the claim. Bryan v. Brown Childs Realty Co., 236 Ga. App. 739, 513 S.E.2d 271 (1999). Evidence of license. - When a regulated business is required to prove that the business is licensed in order to maintain an action for debt, the best evidence rule does not require that the actual licensing document be entered into evidence, and the testimony of an agent of the company is sufficient proof of licensing. Archer Motor Co. v. International Bus. Inv., Inc., 193 Ga. App. 86, 386 S.E.2d 918 (1989). In an action in which a real estate firm was the plaintiff against the defendants, buyers and sellers, for, inter alia, conspiring to deprive the real estate firm of a commission on the sale of the sellers’ home, the requirements of O.C.G.A. § 43-40-24 were satisfied by evidence that the firm’s main owner was a licensed broker and that the realtor, who was one of the listing agents for the sellers during

the relevant time period, was a licensed real estate agent. Ansari v. Mary Anne Frolick & Assocs., 255 Ga. App. 448, 565 S.E.2d 600 (2002). Contracts made without having obtained a license are illegal and void and there can be no recovery for services rendered. Drake v. Parkman, 79 Ga. App. 679, 54 S.E.2d 714 (1949) (decided under former Code 1933, § 84-1410). Contract between an unlicensed real estate broker and an owner of property whereby the broker agrees to sell the property is void and unenforceable, and any action brought by the broker whether for commissions earned or for breach of contract would necessarily fail. Drake v. Parkman, 79 Ga. App. 679, 54 S.E.2d 714 (1949); Mayo v. Lynes, 80 Ga. App. 4, 55 S.E.2d 174 (1949) (decided under former Code 1933, § 84-1413). Public policy under O.C.G.A. § 43-40-24 precluded the president of a leasing agent from enforcing a fee agreement in a breach of contract action against a property company because the leasing agent was not a licensed broker; the agreement could not be severed or saved when the agreement consisted of a single, indivisible promise by the leasing agent or the agent’s affiliates to secure the agent’s client as a tenant for the property company. Amend v. 485 Props., LLC, 401 F.3d 1255 (11th Cir. 2005). Licensing requirements apply to person acting as agent for another in a single real estate transaction. Dixon v. Rollins, 120 Ga. App. 557, 171 S.E.2d 646 (1969) (decided under former Code 1933, § 84-1413). Licensing requirements applicable. - If a person instituted an action for purpose of recovering a sum of money alleged to have been earned by that person, as agent of another, in buying real estate for a principal, that person could not recover if, in acting as such agent, the person was a real estate broker who had not obtained a license to act as such. Hazlehurst v. Southern Fruit Distribs., Inc., 46 Ga. App. 453, 167 S.E. 898 (1933) (decided under former Civil Code 1910, § 1896). Statutory exception to licensure requirement. - In the plaintiff ’s suit in

connection with referral services the plaintiff provided to the defendant in a real estate transaction, the defendant’s motion for summary judgment was properly denied as the real estate licensure requirement did not bar the plaintiff from bringing an action to recover commissions or compensation for the referral services because the plaintiff ’s actions permitted the plaintiff to recover a referral fee under an exception as the defendant expressly offered the plaintiff a referral fee if the plaintiff located a bona fide buyer; the plaintiff located a bona fide buyer; the buyer closed on the sale; and the plaintiff did not receive a referral fee from the party being referred or charge an advance fee. Oconee Inv. Group, LLC v. Turk, 344 Ga. App. 31, 807 S.E.2d 512 (2017). Licensure Requirements for Nonresidents Suit by unlicensed nonresident barred only if services performed here. - Georgia licensure statute does not require a real estate broker who is licensed by and performs a brokerage contract in another state to be licensed here, but requires the broker to be licensed only when the broker performs services under contract within any county in this state. Krizan v. Newman & Co., 153 Ga. App. 337, 265 S.E.2d 68, aff ’d, 246 Ga. 214, 271 S.E.2d 135 (1980); Keenan Co. v. Pamlico, Inc., 245 Ga. 842, 268 S.E.2d 334 (1980). When closing is essential to recovery and occurs in Georgia, provisions apply. - In suit brought by Iowa realtor to recover a fee under letter agreement and otherwise because a sale was consummated and closed with one of the realtor’s clients, when closing was an act essential to recovery and the closing occurred in Georgia, provisions of former Code 1933, § 84-1402 (see now O.C.G.A. T. 43, C. 40) were applicable. Krizan v. Newman & Co., 246 Ga. 214, 271 S.E.2d 135 (1980). Real estate broker licensed only in California was barred from maintaining action for collection of real estate commission arising out of sale of land located in this state, closing for which occurred in this state, when by the broker’s own admission the agreement involved was not merely a referral arrange-

Licensure Requirements for Nonresidents (Cont’d) ment but encompassed that person acting as a real estate broker in this state. Wanamaker v. Esther Wynne Realty Assocs., 163 Ga. App. 338, 294 S.E.2d 581 (1982). If all acts essential to recovery occur out of state. - Prohibition of this section bars suit only if services performed by the plaintiff, which entitle the plaintiff to a commission, were performed within the State of Georgia. If all acts essential to recovery of a commission are

performed outside of this state, the statute has no applicability. Krizan v. Newman & Co., 246 Ga. 214, 271 S.E.2d 135 (1980). When sole contacts with state were in furtherance of isolated interstate sales transaction, this section was inapplicable. Keenan Co. v. Pamlico, Inc., 245 Ga. 842, 268 S.E.2d 334 (1980). Broker doing business in Georgia without required license has no standing to sue for brokers’ commissions. Mathews v. Greiner, 130 Ga. App. 817, 204 S.E.2d 749 (1974) (decided under former Code 1933, § 84-1413).

RESEARCH REFERENCES ALR. - Procurement of real-estate broker’s license subsequent to execution of contract for services as entitling broker to compensation for services, 80 A.L.R.3d 318.

Necessity of having real-estate broker’s license in order to recover commission as affected by fact that business sold includes real property, 82 A.L.R.3d 1139.