Alabama Real Estate Broker State Portion

Topic Brief: Licensing Requirements

Key Concepts

A. Activities which require a license - Buying, selling, or offering to buy or sell, or otherwise dealing in options on real estate situated in Alabama for a fee requires a license — §34-27-30(6). - Procuring or assisting in procuring prospects for the purpose of effecting the sale, exchange, lease, or rental of Alabama real estate for a fee requires a license — §34-27-30(8). - Auctioning, or offering/attempting/agreeing to auction real estate requires a license — §34-27-30(5); "ground men" are not required to be licensed, provided their activities are limited to relaying crowd participation bids to the auctioneer — Rule 790-X-1-.03(4). - Exemptions include: any owner managing or consummating a transaction involving his or her own real estate or that of a spouse, child, or parent — §34-27-2(b)(1); persons performing general clerical or administrative duties for a broker **so long as they do not physically show listed…

Topic Brief: License Status

Subtopics: A. Transferring a license · B. Inactive status · C. Reactivation of a license

Key Concepts

A. Transferring a License

• Written notice to two parties. Any salesperson or associate broker who desires to change his or her qualifying broker shall give notice in writing to the commission and shall send a copy of the notice to his or her current qualifying broker. (§ 34-27-34(b))
• The new qualifying broker's filing. The new qualifying broker must file with the commission a request for the transfer and a statement assuming liability for the licensee. (§ 34-27-34(b))
• Transfer fee and new certificate. On payment of a fee of twenty-five dollars ($25), a new license certificate shall be issued to the salesperson or associate broker for the unexpired term of the original license. (§ 34-27-34(b))
• Death or disability of the qualifying broker. Within 30 days after the…

Key Concepts

Definitions (§ 34-27-2) - Associate broker: "any broker other than a qualifying broker" — § 34-27-2(a)(1). - Company: any sole proprietorship, corporation, partnership, branch office, or lawfully constituted business organization as the Legislature may provide for from time to time, which is licensed as a company under Articles 1 and 2 — § 34-27-2(a)(5). - Qualifying broker: a broker under whom a company is licensed, or a broker licensed as a company doing business as a sole proprietorship, who is responsible for supervising the acts of the company or proprietorship and all real estate licensees licensed therewith — § 34-27-2(a)(12).

Place of business (§ 34-27-2(a)(11)) - Rural home office — § 34-27-2(a)(11)(a): the broker must set up and maintain an office not used for living purposes, with a separate business telephone, separate entrance, properly identified as a real estate office. The office shall be used by the broker only and not as…

Subtopics: A. Payment into fund; B. Payment from fund.

Key Concepts

What the fund is. "RECOVERY FUND. The Alabama Real Estate Recovery Fund." (Alabama Real Estate License Laws & Rules Title 34 – Chapter 27, Section 34-27-2(a)(13)). It is a defined term in Article 1 alongside BROKER, SALESPERSON, LICENSEE, and PERSON ("A natural person," Section 34-27-2(a)(10)).

Payment into the fund (Subtopic A). "When any person makes application for an original license as a broker or salesperson, he or she shall pay, in addition to all other fees, a fee of $30 for deposit in the Recovery Fund" (Section 34-27-31(c)(1)). Note the wording: the $30 is in addition to all other licensing fees, and it is tied to original licensure, for either a broker or a salesperson.

Subtopics: complaints, hearings, disciplinary actions, rehearing, appeals.

Key Concepts

Complaints and probable cause

• The investigator to whom a particular matter is assigned, in consultation with the Attorney General or his representative and the Executive Director, determines whether probable cause exists regarding that matter (Rule 790-X-3-.06).
• A formal complaint drawn by the Commission must include: the name(s) of the accused; the legal authority and jurisdiction; the type of license(s) held and date issued; the particular sections of law or rules alleged to have been violated; and a brief description of the acts or omissions upon which each allegation is based (Rule 790-X-3-.10(2)).

Hearings

• All hearings on contested cases before the Alabama Real Estate Commission shall be conducted by a hearing officer appointed by the Commission (Rule 790-X-3-.11(1)).

Disciplinary actions against licensees (Section 34-27-36)

Key Concepts

• When the statement is due. "A licensee, in a single-family residential sales transaction, must furnish to his/her client, consumer, or customer a complete estimated closing statement each time the licensee presents a written offer or counteroffer to the client, consumer, or customer," and each time the licensee prepares a written offer or counteroffer for the client, consumer, or customer. (Rule 790-X-3-.04(1))
• Transaction type covered. The requirement applies specifically to single-family residential sales transactions. The rule does not extend it to commercial, multi-family, or rental transactions. (Rule 790-X-3-.04(1))
• Who must receive it. The duty runs to the licensee's client, consumer, or customer alike — it is not limited to clients. (Rule 790-X-3-.04(1))
• Required content. The statement must contain the licensee's best estimates of all costs the client, consumer, or customer may have at closing and the approximate amount of those costs. It is not limited to certain cost categories…

Key Concepts

Where trust funds go. All funds belonging to or being held for others must be deposited in a separate federally insured account or accounts in a financial institution located in Alabama, kept separate from the licensee's personal funds (Title 34, Chapter 27, §34-27-36(a)(8)(b)). Commingling funds belonging to others with the licensee's own funds is prohibited (§34-27-36(a)(8)(a)(b)).

Account control. The qualifying broker shall be a customer of the financial institution holding all such accounts and shall be one of the persons with authority to deposit and withdraw funds and to write or make checks as necessary on all such accounts (Rule 790-X-3-.03(1)).

Salesperson and associate broker duty. Each real estate salesperson or associate broker shall pay over to his or her qualifying broker all funds coming into his or her possession in trust for other parties immediately upon receipt of same (Rule 790-X-3-.03(2)).

Key Concepts

Definitions and default relationship - A "consumer" is a person who obtains information, advice, or services concerning real estate from a real estate licensee — the broadest category, covering both clients and customers (§34-27-81(5)). - An agency relationship shall not be assumed, implied, or created without a written bilateral agreement establishing the terms of the agency relationship (§34-27-82(b)). - In the absence of a signed brokerage agreement, the transaction brokerage relationship shall remain in effect (§34-27-82(e)). A licensee is presumed to be acting as a transaction facilitator for any otherwise unrepresented party to whom the licensee is providing brokerage services (§34-27-82(e); Rule 790-X-3-.14(4)(c)). - After disclosure, the consumer may make an affirmative election of a specific type of brokerage arrangement (§34-27-82(e)); converting to single agency also requires the written bilateral agreement of §34-27-82(b).

Alabama Real Estate Broker — State Portion

Key Concepts

Commission authority and process (Section 34-27-36(a)) - The Commission or its staff may investigate a licensee's actions and records on its own or on the verified complaint in writing of any person. - The Commission may issue subpoenas and compel the testimony of witnesses and the production of records and documents during an investigation. - If probable cause is found during the investigation, a formal complaint shall be filed and the Commission shall hold a hearing on the formal complaint. - Penalties: revoke or suspend a license, impose a fine, or reprimand the licensee. The fine is not less than $100 nor more than $2,500 for each instance of guilt (Section 34-27-36(a); also cited as "fine range"). - The Commission may stay a revocation or suspension and instead require completion of an approved education course and/or restitution to accounts containing funds held for other parties.…