What Tenant Representation Is and How It Is Regulated in Georgia
Tenant representation means acting in the interests of a tenant in the process of finding office or industrial space and concluding a lease agreement: selecting properties, negotiating terms and preparing the document. The Civil Code of Georgia does not contain a separate, special status of a tenant representative: the commission-based model tied exclusively to the tenant's side, widespread in American practice, is not singled out as a distinct institution under Georgian legislation. Instead, such a relationship is governed by the general rules of brokerage, the norms on brokerage in the lease of a dwelling, and lease contract law. This means that the representative's fee, authority and responsibility must be clearly documented in the agreement by which the brokerage is undertaken, and it is precisely that document which determines who pays for the service and when.
General Rules on the Brokerage Fee
The core of the brokerage fee lies in Article 744 of the Civil Code: a person who promises another a remuneration for brokerage aimed at the conclusion of a contract must pay that remuneration only if the contract is concluded as a result of the brokerage. This rule is fundamental for a tenant representative as well: the fee is generated only by the result, that is, by the actual conclusion of the contract. Where the contract is concluded subject to a condition, the remuneration may be demanded only after the condition has occurred. Where the amount of the remuneration is not determined, the customary remuneration is deemed agreed. Regardless of whom the representative serves, tenant or lessor, knowledge of these rules protects a party from groundless payment demands.
An important protective norm also exists: an agreement concluded to the detriment of the client deviating from the first and second sentences of this article is void. In practice this means that a clause under which the client pays the fee even where no contract has been concluded is void by law. A result-linked fee is therefore the correct structure for formulating a representative's mandate.
The Housing Broker and Its Scope of Application
For brokerage connected with the lease of a dwelling the Code contains a separate norm. Under Article 749 of the Civil Code, for the contract by which a person undertakes brokerage aimed at concluding a dwelling lease contract, called a housing broker, the general rules of brokerage apply, unless something else follows from brokerage in the lease of a dwelling. Representation focused on finding residential space therefore operates under exactly this regime. At the same time, the norms on dwelling-lease brokerage do not apply to contracts whose subject is brokerage during tourism and business travel. In the case of commercial space, the general rules of brokerage apply directly, and the representative's agreement must be built precisely on them.