Under what circumstance is it illegal to pay a commission?

A commission is fundamentally a fee paid to a real estate agent as a percentage of a property's sale price for their services in facilitating a transaction. However, there are specific circumstances in which paying a commission would be illegal under Georgia law, particularly surrounding the requirement of proper licensing and contractual agreements.

In this case, the commission payment to a Georgia licensee who is listing property in Florida is illegal because it violates the state-specific regulations governing real estate transactions. Each state has its own licensing requirements, and a Georgia broker or agent is not authorized to conduct real estate activities in Florida without a valid Florida license. Engaging in such activities without the proper licensure creates a situation where any commission paid for those services would be unlawful.

Understanding this context highlights the importance of adhering to the licensing laws that govern real estate transactions, which vary from one state to another, ensuring that all parties involved are properly licensed in the jurisdiction where the property transaction takes place.