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Padgett v. City of Moultrie: Commercial Broker’s Lien Upheld by Georgia Court

In a case of first impression, the Court of Appeals of Georgia upheld the validity of a commercial broker’s lien under the Georgia Commercial Real Estate Broker Lien Act. Padgett v. City of Moultrie. In this case, a commercial real estate broker (the “Broker”), had entered into an agreement with Cambridge Health Care, Inc. (“Cambridge”) to provide services in connection with its purchase of a property in the City of Moultrie for conversion into a health care facility.

Among other things, the Broker’s services included negotiating the purchase of the property, obtaining financing, site analysis, market feasibility studies, and assisting the architect and others with the renovation. In return, Cambridge agreed to pay the Broker an agreed-upon sum for “real estate and consulting services.” When the Broker was not paid, she filed a lien against the property pursuant to the Georgia Commercial Real Estate Broker Lien Act and ultimately filed a lawsuit to foreclose the lien.

The defendants claimed that the Broker’s lien was not valid because some of the services she provided were not directly related to the actual sale of the property and were not required to be provided by a real estate broker under the applicable Georgia statute. Since some of her activities were not “licensed services,” they argued that her lien was not valid. The trial court agreed with the defendants and granted their summary judgment motions.

On appeal, the Court of Appeals of Georgia disagreed with the lower court and ruled in the Broker’s favor, finding that her services may be secured by a lien on the property. The court concluded that a commercial broker’s lien is not limited to “licensed services.” As it pointed out, even though some of the services she provided did not require a real estate license, she was required to be licensed in order for her to provide many of the services. It observed that it is unnecessary and would be unworkable to try to determine which services require a license and which do not in any given contract between a real estate broker and a client - if those distinctions were made, every commercial broker lien would be disputed.

The Padgett court also addressed the issue of the priority of the Broker’s lien in relation to other liens on the property, and on the specific and complex facts of this case, determined that her lien had priority over the other liens.

Padgett v. City of Moultrie, 229 Ga.App. 500, 494 S.E.2d 299 (Ga. Ct. App. 1997).