Alabama Real Estate Broker State Portion

On violation of a determinable estate's special limitation, title automatically reverts to the holder of the possibility of reverter with no legal action, whereas a condition subsequent requires the grantor to bring a court action to assert the right of reentry.

A void contract has no legal effect from the beginning (e.g., adjudicated mental incompetence, forged signature, illegal purpose, missing essential elements), while a voidable contract (e.g., duress, minors, intoxicated persons) is binding and treated by courts as valid and enforceable unless the party entitled to disaffirm does so in time.

An unenforceable contract, such as an oral agreement to sell real property, may have all valid elements but cannot be enforced in court because it fails the Statute of Frauds writing requirement, unlike void contracts (illegal purpose) or voidable ones (minors, intoxicated persons).

Under an exclusive right-to-sell listing the broker earns the full agreed commission no matter who sells the property, including the seller personally; under an exclusive agency listing the seller retains the right to sell independently without owing the broker a commission.

A latent defect is a hidden structural or property defect not visible or discoverable by ordinary inspection (and must be disclosed if known), while a patent defect is visible and obvious on routine observation.

GRM is based on monthly gross rent and used for one- to four-unit residential properties with no other income, while GIM is based on annual gross income and used for properties of five or more units and commercial properties; both use gross income rather than NOI, unlike the capitalization rate method.

With a purchase money mortgage the buyer receives the deed and legal title at closing and grants the seller a security interest for the unpaid balance, whereas under a land contract the seller retains legal title (buyer holds equitable title) until all installment payments are made.

A deed transfers real property and must be executed, delivered, and accepted; a bill of sale is the instrument that transfers personal property.

A special assessment is a lien only against the specific properties that directly benefit from a public improvement (sidewalks, streetlights, sewers), while general ad valorem taxes are levied on all properties in the taxing jurisdiction based on assessed value regardless of benefit.

A properly classified independent contractor pays his or her own income and Social Security taxes, while an employer must withhold Social Security and income taxes from employees and also pay unemployment compensation tax on their wages.

Novation substitutes an entirely new contract for the existing one and discharges the old obligation, an amendment modifies existing terms, and an addendum adds new terms or provisions (and may be added after execution if both parties mutually agree).

An agency coupled with an interest (agent holds an ownership interest in the subject property) cannot be revoked by the principal acting alone and is not terminated by the principal's death, unlike an ordinary agency that either party may terminate unilaterally though damages may apply.

A property manager for income-producing property is typically a general agent who may represent the principal in a broad range of matters and bind the principal within the scope of authority, while a special agent is limited to one specific act and a universal agent has virtually unlimited authority.

A deed in lieu does not eliminate junior liens and typically causes the lender to lose FHA, VA, or private mortgage insurance rights, whereas formal foreclosure of the senior lien sells the property free of the foreclosing mortgage and all junior liens.

A designated single agent is a type of single agent — not a dual agent — with the same duties as a single agent, and no licensee is assumed to have knowledge about a party with whom the licensee has not entered an agency agreement.