Georgia Broker Supplement Examination

Key Concepts

Commission Organization (O.C.G.A. Title 43, Ch. 40)

• The Georgia Real Estate Commission (GREC) is the regulatory body for real estate licensees in Georgia. It cannot sue or be sued except when the Attorney General initiates action in the interest of the state (1976 Op. Att'y Gen. No. 76-93).
• The Commission has authority to adopt rules and regulations, but only within the scope and limits set by the legislature — it cannot exceed its statutory authority (O'Neal v. Georgia Real Estate Comm'n).
• Title 43, Ch. 40 is regulatory only — it does not change substantive civil law for actions involving agent misconduct (Johnson Realty, Inc. v. Hand, 189 Ga. App. 706).

Required Licensure & Qualifications

• Anyone acting as a real estate broker or salesperson in Georgia must hold a valid license. Petitions to recover commission are fatally defective if they fail to allege compliance with licensure requirements (Moreland v. Kilgore).
• A veteran's exemption certificate does not exempt brokers or agents from paying license fees (1950-51 Ga. Op. Att'y Gen. 229).
• Brokers may charge a fixed fee and collect part or all of it before performance of services (1977 Op. Att'y Gen. No. 77-79).

Trust Accounts

• Brokers must maintain separate trust/escrow accounts for client funds — commingling with personal or operating funds is a violation.
• Trust account records must be reconciled regularly and available for Commission inspection.

Unfair Practices

• Prohibited acts include: misrepresentation, fraud, dishonest dealing, and failure to disclose material facts. These apply to both brokers and affiliated licensees.
• A cause of action may be based in tort for conspiracy to deprive a broker of commissions (Mathews v. Greiner, 130 Ga. App. 817).
• Compensation on a quantum meruit basis is available to licensees where appropriate (D.L. Stokes & Co. v. McCoy).

Fair Housing Laws

• Georgia fair housing rules align with federal Fair Housing Act protections: race, color, religion, sex, national origin, disability, and familial status.
• Blockbusting, steering, and redlining are explicitly prohibited unfair practices.

Real Estate Education & Licensing Fees

• Continuing education is required for license renewal. Failure to complete CE results in license lapse.
• Fees are set by the Commission; all applicants — including veterans — must pay required fees.

Key Concepts

License Law & Supervision

Under O.C.G.A. Title 43, Ch. 40, the qualifying broker bears ultimate legal responsibility for all activities of licensees affiliated with the firm. The broker must actively supervise — not just nominally oversee — all sales associates and associate brokers. The Georgia Real Estate Commission (GREC) has authority to sanction the broker for supervisory failures, even if the broker was unaware of a licensee's misconduct.

• The broker must maintain a written office policy manual covering supervision procedures, transaction handling, and compliance expectations.
• Every licensee must be affiliated with a broker; compensation may only flow through the employing broker.
• Associate brokers hold a broker license but function under the supervision of the qualifying broker of the firm.

Independent Contractor Agreements

Most Georgia real estate licensees operate as independent contractors, not employees. However, this classification does not eliminate the broker's supervisory obligation under license law — GREC requires supervision regardless of IRS or labor law classification.

A compliant IC agreement must specify: - Compensation structure (commission splits, referral fees, draws) - Duties and conduct expectations aligned with license law compliance - Termination procedures and license transfer obligations - A statement that compensation is based on production, not hours worked

Failure to document the IC relationship properly can expose the broker to IRS employment tax liability and GREC disciplinary action.

Record Keeping

Georgia brokers must retain all transaction records for three (3) years, including: - Signed purchase and sale agreements - Leases and property management agreements - Trust account records and reconciliation statements - Rejected and countered offers — these must be retained even if no contract was formed - Copies of all earnest money receipts

Records must be available for GREC inspection upon demand. Failing to retain rejected offers is a specific, frequently cited violation.

Trust Account & Escrow Management

The qualifying broker is personally responsible for all trust/escrow accounts held by the firm.

Key Concepts

Closing calculations in Georgia real estate involve prorations, commissions, deed stamps, and settlement charges. While the reference material provided focuses primarily on licensing law (O.C.G.A. Title 43, Ch. 40), the exam tests your ability to apply standard real estate math principles within a Georgia transaction context.

Key Georgia-Specific Items:

• Transfer Tax (Intangible/Deed Stamps): Georgia imposes a real estate transfer tax of $1.00 per $1,000 (or fraction thereof) of the purchase price, paid by the seller at closing. Calculate on the total sales price, not the net proceeds.
• Intangible Recording Tax: Assessed on new mortgage loans at $1.50 per $500 (or fraction thereof) of the loan amount — paid by the buyer.
• Broker Commission: Brokers are legally entitled to commission as agreed in the listing contract (O.C.G.A. § 43-40). Commission is typically calculated as a percentage of the gross sales price, not net.
• Proration Convention: Georgia closings typically use a 365-day year (actual days) or a 360-day banker's year — know which the problem specifies. Taxes and rents are the most commonly prorated items.
• Closing Disclosure / HUD-style Settlement: Understand which charges appear as debits or credits to buyer and seller on the settlement statement.

Key Formulas & Tables

Transfer Tax (Deed Stamps) — Paid by Seller

Tax = (Sales Price ÷ 1,000) × $1.00 — round UP any fraction to the next $1,000

Example: $247,500 sales price → $248,000 ÷ 1,000 × $1.00 = $248.00**

Intangible Recording Tax — Paid by Buyer

Tax = (Loan Amount ÷ 500) × $1.50 — round UP any fraction to the next $500

Example: $180,000 loan → 360 × $1.50 = $540.00**

Proration Formula (360-day year)

Daily Rate = Annual Amount ÷ 360 Proration = Daily Rate × Number of Days

Proration Formula (365-day year)

Daily Rate = Annual Amount ÷ 365

Commission Calculation

Commission = Sales Price × Commission Rate Cooperating Broker Split = Commission × Split Percentage

Seller's Net Proceeds

Net = Sales Price − Mortgage Payoff − Commission − Transfer Tax − Other Seller Costs

Loan-to-Value (LTV)

LTV = Loan Amount ÷ Appraised Value (or Sales Price, whichever is lower)

Buyer's Down Payment

Down Payment = Sales Price − Loan Amount