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Folds v. Barber: Broker Loses Boyfriend, Referral Fees

November 1, 2004

Georgia’s highest court has considered whether a real estate licensee who referred clients to her lover who was also a licensee could later claim referral fees when the lovers’ relationship came to an end.

Carolyn Folds (“Folds”) and Donald Barber (“Barber”) were real estate professionals who began a romantic relationship with each other. The lovers purchased a home together, with Folds making a downpayment of $10,000 and Barber paying approximately $18,000 at closing, with Barber taking title to the property. The couple agreed to set-up a checking account into which they would both deposit funds to pay for the mortgage and other expenses.

During the course of their relationship, Folds referred a number of sellers to her paramour, causing him to earn $77,000 in commissions. Barber did not pay Folds a referral fee nor did the parties negotiate such a fee, as Folds expected Barber to marry her.

Eventually, the nectar of love turned sour and the relationship came to an end. Folds filed a lawsuit against Barber, alleging breach of promise to marry, fraud, and specific performance. Barber filed a counterclaim, seeking an equitable partition, or dividing, of the coupler’s property. The trial court ordered that the jointly purchased home be sold, with the parties collecting the amounts they had contributed towards the purchase of the home and thereafter splitting the excess proceeds. Folds appealed the trial court’s ruling.

The Supreme Court of Georgia affirmed the ruling of the trial court. On appeal, Folds argued that she should receive compensation for the referrals she made to Barber. Thus, she challenged the court’s partition of the property, arguing that it failed to account for these fees.

The court rejected these arguments, finding that there was no evidence showing that Folds and Barber had attempted to negotiate referral fees. Since parties have to reach some type of agreement before a referral fee agreement can be enforced, the court ruled the trial court had property rejected this argument.

Next, Folds argued that she had conferred a benefit upon Barber by referring clients to him and so should be compensated for this benefit. The court found that in order to receive recovery for unjust enrichment, Folds would need to prove the value of the benefit she allegedly conferred upon Barber. Since Folds had failed to offer any evidence to the trial court on the value of the benefit conferred upon Barber, the court rejected her unjust enrichment theory as well. Thus, the trial court was affirmed.

Folds v. Barber, 278 S.E.2d 409 (Ga. 2004).