4.2 Georgia License Law Violations and Discipline

GREC's Disciplinary Authority

The Georgia Real Estate Commission (GREC) administers the Real Estate License Law (O.C.G.A. § 43-40) and the Commission's Substantive Regulations. GREC can act on a consumer complaint, on a referral, or on its own initiative after a routine office audit. Unlike fair-housing complaints (which go to the GCEO), license-conduct complaints go to GREC.

The Most-Tested Violations

State-portion questions cluster around trust-account handling and failure to supervise. Memorize the trust-account vocabulary precisely — the exam loves to make you distinguish these three:

Georgia requires earnest money to be deposited and the trust account reconciled monthly. A broker who deposits earnest money into a personal account has commingled; spending it has converted it.

Statutory Grounds for Discipline (O.C.G.A. § 43-40-25)

GREC may sanction a licensee who:

1. Obtains a license by fraud or misrepresentation.
2. Engages in dishonest dealing, fraud, or misrepresentation.
3. Commingles or converts trust funds.
4. Fails to account for or deliver funds or documents.
5. Pays a commission or fee to an unlicensed person for brokerage activity.
6. Fails to disclose a material adverse fact the licensee knows.
7. Is convicted of a crime involving moral turpitude.
8. Fails to supervise affiliated licensees (broker responsibility).
9. Violates fair housing or other applicable law.

Trap: Paying a referral fee to an unlicensed person for finding a buyer is a violation. A licensee may give a nominal, non-contingent thank-you gift to a past client, but never a commission split tied to a transaction.

Broker Responsibility and Supervision

Georgia places affirmative duties on the broker, not just the offending salesperson. A broker who fails to actively supervise affiliated licensees, fails to maintain the trust account properly, or fails to keep transaction records for the required period can be disciplined even if the broker personally committed no fraud. This is why a single salesperson's trust-account error can draw a separate citation against the broker for failure to supervise — the exam frequently pairs the two.

Unlicensed Activity and Independent Contractors

Georgia forbids performing any act requiring a license without holding one. An assistant may schedule showings and handle paperwork, but may not negotiate terms, quote prices independently, or be paid a commission. Splitting a fee with such an unlicensed assistant is a § 43-40-25 violation that can reach both the assistant (for unlicensed practice) and the licensee (for the improper split).

Resolution Ladder

Citations and the Fine Caps

GREC resolves many cases with a citation, which is an administrative penalty that does not require a full hearing if the licensee accepts it.

Typical citation fines (illustrative, set by Commission policy):

If the licensee refuses the citation, the matter proceeds to a formal hearing.

Formal Sanctions and Hearing Rights

For serious conduct, GREC may impose probation, suspension, revocation, denial of renewal, required education, or ordered audits. Before suspension or revocation, the licensee is entitled under the Georgia Administrative Procedure Act to:

• Written notice of the charges;
• A hearing before an Administrative Law Judge (ALJ) at the Office of State Administrative Hearings;
• The right to present evidence, call witnesses, and have counsel;
• The right to appeal an adverse decision to superior court.

The Real Estate Education, Research, and Recovery Fund

The Recovery Fund (O.C.G.A. § 43-40-22) is a consumer-protection fund of last resort, financed by licensee fees. A consumer who wins a court judgment against a licensee for fraud or conversion — and cannot collect it — may apply to the fund.

Critical rule: When the fund pays on a licensee's behalf, that licensee's license is automatically revoked by operation of O.C.G.A. § 43-40-22, and the person is not eligible for a new license until the fund is repaid in full plus interest (at the judgment rate). A bankruptcy discharge does not erase this repayment obligation.

Worked example: A salesperson defrauds two unrelated buyers of $40,000 each. The fund pays $25,000 on the first transaction and $25,000 on the second — $50,000 total. A third claim could draw up to $25,000 more, reaching the $75,000 aggregate ceiling, after which the fund pays nothing further for that licensee. The license is revoked, and the person cannot be relicensed until the fund is repaid in full with interest.