Where this fits on the exam
| Official syllabus topic | State Laws and Rules: Education, Research and Recovery Fund |
|---|---|
| Official PSI group | State Laws and Rules |
| Published group count | 16 of the 52 Georgia questions |
| Exam portion | Georgia salesperson supplement |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
The Rule
PSI publishes 16, 21, and 15 items for the three Georgia groups. It does not publish a guaranteed subtopic count. The statute, current GREC rule, contract, or other cited primary authority controls each lesson.
The lesson
Who the fund protects
The fund supports education and research and provides limited recovery for actual or compensatory losses from a licensee's violation. A GREC complaint alone does not produce payment. It is not insurance against a falling market or a general guarantee that every transaction loss will be repaid.
Judgment and collection first
The claimant needs a qualifying judgment, completed proceedings and appeals, and the required reasonable collection efforts. The court then considers a verified claim. A licensee acting as principal or agent has no claim against the fund; the statute also excludes specified close relatives of the judgment debtor.
Two deadlines to distinguish
The action leading to recovery must begin within two years after the cause of action accrues. Applying to the court for a fund payment requires 30 days' written notice to GREC. These measure different events: the lawsuit deadline and notice of the later payment application.
Payout limits
The cap is $25,000 for one transaction, however many people or parcels it involves. One claimant may never recover more than $25,000 from the fund. Orders totaling $75,000 for one licensee end the fund's liability for that licensee. The $1 million minimum fund balance is not a claimant's payout limit.
Automatic revocation
The license is automatically revoked when the court issues an order authorizing fund payment. If the responsible license is a firm's, its qualifying broker's license is also revoked. Eligibility for a new license requires full repayment plus interest at the judgment rate; repayment does not automatically restore the old license.
Decision rule
Georgia rule and national contrast
Worked Georgia example
Scenario. A buyer loses money after a licensee's fraud and files only a complaint with GREC, asking the fund for immediate reimbursement.
Reason it through. A disciplinary complaint and a recovery claim are different. The fund process requires the statutory judgment and collection steps before payment is considered.
Answer. The complaint alone is insufficient for Recovery Fund payment.
Common exam traps
- Treating the fund as insurance
- Skipping the court judgment
- Confusing discipline with compensation
- Ignoring license revocation and repayment after payment
Original practice questions with detailed explanations
These are original instructional questions mapped to the July 1, 2026 PSI outline. They are not copied from PSI or a live examination. Choose an answer before opening the explanation.
Question 1A buyer loses $18,000 because of a licensee's fraud and files a complaint with GREC. Can the buyer now collect from the Recovery Fund?
- A. Yes, because filing the complaint starts a fund payment
- B. No, a qualifying judgment and collection steps come first
- C. Yes, as soon as GREC finds that the licensee broke the law
- D. No, because the fund pays only losses above $25,000
Show answer and explanation →
Answer: B. No, a qualifying judgment and collection steps come first
A disciplinary complaint and a Recovery Fund claim are different processes. The claimant needs a qualifying court judgment and must complete the required collection, notice, and application steps before payment is considered. The GREC-finding answer looks plausible because discipline feels like proof, but the fund pays by court order.
- A. Incorrect. Filing a disciplinary complaint alone does not authorize a Recovery Fund payment.
- B. Correct. A qualifying judgment and the statutory collection, notice, and application steps precede a payment order.
- C. Incorrect. A GREC disciplinary finding is not a substitute for the required court process.
- D. Incorrect. The $25,000 transaction limit is a ceiling on payment, not a minimum loss needed to claim.
Question 2A court orders the Recovery Fund to pay a claim caused by a licensee's violation. What happens to that licensee's license?
- A. It is placed on probation for one year
- B. Nothing, because the fund has already covered the loss
- C. It is suspended until the next renewal date arrives
- D. It is automatically revoked; a new license requires repayment plus interest
Show answer and explanation →
Answer: D. It is automatically revoked; a new license requires repayment plus interest
The license is automatically revoked when the court issues an order authorizing payment. The licensee cannot receive a new license until the fund is repaid in full with interest. The payment does not end the licensee's obligation. The nothing-happens answer looks plausible because the victim is made whole, but the licensee now owes the fund.
- A. Incorrect. The statutory consequence of the payment order is automatic revocation, not one year of probation.
- B. Incorrect. Payment creates the revocation and repayment consequences; it does not excuse the licensee.
- C. Incorrect. The license does not remain merely suspended until renewal.
- D. Correct. The authorizing court order triggers revocation, and a new license requires full repayment with interest.
Question 3What is the most the Recovery Fund will pay on claims arising from a single transaction?
- A. $25,000
- B. $100,000
- C. $1,000,000
- D. There is no cap
Show answer and explanation →
Answer: A. $25,000
Recovery is capped at $25,000 per transaction. The $1 million figure is the minimum balance the Commission keeps in the fund, not a payout limit. The no-cap answer can mislead people who see the fund as general transaction insurance, which it is not.
- A. Correct. The statute caps recovery at $25,000 for a single transaction.
- B. Incorrect. $100,000 is not the statutory per-transaction cap.
- C. Incorrect. The $1 million fund balance is not the maximum payout for one transaction.
- D. Incorrect. The fund has statutory payout limits, including the $25,000 transaction cap.
Question 4Two eligible buyers have uncompensated losses of $18,000 and $17,000 from the same transaction. Before any other limits apply, how much may the fund pay for that transaction in total?
- A. $35,000, because there are two buyers
- B. $50,000, because each has a $25,000 limit
- C. $25,000 shared across the transaction's claims
- D. $75,000, the limit for one licensee
Show answer and explanation →
Answer: C. $25,000 shared across the transaction's claims
The $25,000 transaction cap applies regardless of the number of aggrieved people or parcels. The two losses do not create two transaction limits. The separate $75,000 figure concerns aggregate payments on behalf of one licensee.
- A. Incorrect. The two losses total $35,000, but both arise from one transaction capped at $25,000.
- B. Incorrect. Multiple claimants do not multiply the transaction cap into two separate $25,000 limits.
- C. Correct. The combined claims share one $25,000 transaction ceiling before other applicable limits.
- D. Incorrect. The $75,000 aggregate licensee limit does not replace the smaller transaction limit.
Question 5A court issues an order authorizing a Recovery Fund payment on Monday. GREC sends the payment on Friday. When does the responsible licensee's automatic revocation occur?
- A. Monday, when the court issues the authorizing order
- B. Friday, when the payment is sent
- C. At the next renewal date
- D. Only after a separate GREC disciplinary hearing
Show answer and explanation →
Answer: A. Monday, when the court issues the authorizing order
The statutory trigger is the court order authorizing payment, not the later transfer of money. Waiting until Friday or the next renewal would apply the wrong event.
- A. Correct. Automatic revocation occurs when the court issues the order authorizing payment.
- B. Incorrect. The later transfer of money is not the statutory revocation trigger.
- C. Incorrect. The court order takes effect without waiting for the next renewal.
- D. Incorrect. The statute attaches automatic revocation to the authorizing order without requiring another disciplinary hearing.
Question 6Fund payment orders already total $75,000 on behalf of one licensee. What does that total mean for the fund's liability for that licensee?
- A. Each new claimant may still receive another $25,000
- B. The aggregate liability for that licensee has ended
- C. The entire Recovery Fund is closed
- D. Only claims involving commercial property are now barred
Show answer and explanation →
Answer: B. The aggregate liability for that licensee has ended
Section 43-40-22 sets an aggregate $75,000 limit on behalf of one licensee. Reaching it ends the fund's liability for that licensee, not the whole fund. It is separate from the transaction and claimant limits.
- A. Incorrect. Additional transaction claims cannot extend payments beyond the aggregate licensee limit.
- B. Correct. The $75,000 aggregate ceiling ends the fund's liability on behalf of that licensee.
- C. Incorrect. The limit concerns one licensee; it does not close the fund to all other claims.
- D. Incorrect. The aggregate cap does not turn on whether later transactions involve commercial property.
Ready to move on?
You are ready for the next lesson when all of these are true.
- Distinguish a disciplinary complaint from a qualifying judgment and fund-payment claim.
- Apply the $25,000 transaction and claimant limits without multiplying them by the number of buyers.
- Identify the $75,000 aggregate licensee limit and keep it separate from the $1 million fund balance.
- Use the court order as the trigger for automatic revocation.
- Explain why repayment permits an application for a new license rather than automatic restoration.
- Solve a new payout scenario without checking the example first.
Recommended next lesson
Continue with Georgia Fair Housing Law and Federal Overlap. The Recovery Fund covers money lost to a licensee's violation, and the next lesson turns to a different harm, discrimination, where the same conduct can bring federal fair housing liability and GREC discipline at once.
Return to the State Laws and Rules hub for the complete official branch and the full lesson list for this Georgia group.