What Happens If Your Real Estate License Lapses During a Transaction?
In the fast-paced world of real estate, it’s easy for time to slip away from you. Perhaps, like many others, you might find yourself in the middle of a transaction when your real estate license lapses. This daunting scenario was recently addressed by Dana Sparks, broker of Maximum One Greater Atlanta Realtors and director of the Real Estate Academy of America, in a helpful video.
For a comprehensive understanding of this topic, we highly recommend watching Dana’s full video, but let’s break down the critical points she highlighted to help you navigate this situation effectively.
Understanding Real Estate License Lapse
In most cases, a license lapse occurs when an agent fails to complete their Continuing Education (CE) credits or fails to renew their license every four years. When your license enters a lapse status, it is considered inactive and is no longer held by any broker. This can be a problematic situation, especially if you’re actively working on a real estate transaction.
Managing Ongoing Transactions During a Lapse
It’s crucial to remember that all contracts in the real estate industry are done in the name of your broker. So, if your license becomes inactive during an ongoing transaction, your broker is permitted to sign amendments and documents on your behalf.
While your license is inactive, it’s important to ensure that the cooperative agent (or co-op agent) sends any documents that need to be signed to your broker.
Re-Activating Your Real Estate License
To reactivate your license, you will typically need to complete any outstanding CE credits or pay any fees to the relevant state regulatory body (in Georgia, for instance, this entity is often referred to as “Greg”). In addition, you’ll need to reaffiliate with your broker using a specific change form.
What About Your Commission?
In most cases, as long as your license was active when the contract was initiated or went binding, you are still eligible to receive your commission—even if your license goes inactive before closing. This is governed by Georgia License Law §OCGA 43-40-18c(5), which stipulates that as long as the transaction was started when the license was active, the broker may pay that licensee’s commission.
The Bottom Line
The important thing to remember is that your license must be active and held by a qualifying broker when a contract is initiated and goes binding. If your license lapses or goes inactive before it closes, the broker can still pay you your commission. Meanwhile, the broker will be responsible for signing documents.
Special Cases: Deceased Agents with Pending Deals
If an agent with an active contract unfortunately passes away, the broker can still sign the documents. Furthermore, the broker can pay the commission to the estate or heirs of the deceased agent. This scenario falls under Georgia License Law §OCGA 43-40-25b(17), which states that a broker may pay the estate or heirs of a deceased real estate agent, provided the agent had a valid Georgia real estate license at the time the commission was earned and at the time of their death.
Navigating a license lapse can be complex, and the help of an experienced professional like Dana Sparks can be invaluable during such a time. Don’t forget to view the entire video for an in-depth discussion of this topic. And remember, to avoid finding yourself in this situation, always keep track of your license renewal timeline and CE credit requirements. The key to success in real estate often lies in proactive management and attention to detail.
