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FEES$25.00Criminal records searchChange of company name, licensee’s name, company addressChange of status from inactive to active (not active to inactive)$30.00Recovery fund fee, when obtaining temporary active licenseEducation & research ($7.50 per year for renewal)$85.00Salesperson and company license fee per year$95.00Broker’s license fee per year$150.00Penalty for non-renewal after August 31 or licensing periodTemporary license fee for one yearTemporary license fee for one yearInitial broker’s license fee$200.00Party appealing decision shall post appeal bondMiscellaneous fees are as follows:★ Disciplinary action fees are no less than $100 nor exceeding $2,500.00★ Witness in hearing pay○ $20.00/day○ $0.56/mile1

WHO MUST BE LICENSED?Any person, partnership, corporation or branch office with the intention orexpectation of receiving or collecting a fee, commission or other valuableconsideration from another to:1. Sell, exchange, purchase, rent or lease real estate2. Offer to sell, exchange, purchase, rent or lease real estate3. Negotiate or attempt to negotiate the listing, sale, exchange, purchase, orleasing or real estate4. List or offer or attempt to agree to list real estate for sale, rent, lease, exchangeor trade5. Auction, offer or attempt or agree to auction real estate6. Buy or sell or offer to buy or sell, or otherwise deal in option on real estate7. Aid, attempt or offer to aid in location or obtaining for purchase, rent or leaseany real estate8. Procure or as in procuring of prospects for the purpose of affecting the sale,exchange, lease or rental of real estate9. Procure or assist in procuring of properties for the purpose of affecting thesale10. Present them, or be presented, as being able to perform an act for which alicensee is requiredAuctioneersThe law requires that one who auctions, or offers or attempts or agrees to auctionreal estate must be licensed. Persons commonly referred to as “ground men” are notrequired to be licensed, provided their activities shall be limited to relaying crowdparticipation bids to the auctioneer.2

WHO DOES NOT NEED TO BE LICENSED?1. An owner in the managing of or in consummating a real estate transactioninvolving their own real estate or the real estate of their spouse, child or parenta. The term “owner” is defined as the individual owner themselves or inthe case of a corporation or partnership, a partner or corporate officerwho has the authority of and does make management decisionsaffecting the overall policy of the corporation or partnership.2. An attorney-at-law performing their duties as an attorney-at-law3. Persons acting without compensation and in good faith under a dulyexecuted power of attorney authorizing the consummation of real estatetransaction4. Persons or a state of federally chartered financial institution acting as areceiver, trustee, administrator, executor or guardian, or acting under a courtorder or under authority of a trust instrument or will5. Public officers performing their official duties6. Persons performing general clerical or administrative duties for a broker7. The duties of clerical or office employees of a real estate company shall belimited to the duties normally attributed to such positions. No such employeeof a licensee or any other person shall physically show listed property, solicit oraccept listing, negotiate sales or leases, hold themselves out as engaged in thereal estate business or perform any other act for which a licensee is requiredunless properly licensed8. Persons acting as the manager for an apartment building or complexHowever, this exception shall not apply to a person acting as an on-sitemanager of a condominium complex9. Persons licensed as time-share sellers performing their duties10. Transactions involving the sale, lease or transfer of cemetery lots3

LICENSE PERIODThat period of time beginning on October 1 on a year designated by the commissionto be the first year of a licensing period and ending on midnight, September 30 ofthe year designated by the commission as the final year of that licensing period.The current licensing period is from October 1 of each even numbered year throughSeptember 30 of the next even numbered year. License should be renewed byAugust 31 and CE completion provided by September 30. Failure to comply withthese requirements will result in a $150.00 late penalty and inactivation of the licenseuntil the issue has been corrected.APPLICATIONS FOR EXAMINATIONS AND LICENSES1. Should any applicant for a real estate salesperson or broker’s license falselyanswer any questions on either the exam or license application, ormisrepresent any facts relating to either application, it may be rejected by thecommission, returned to the applicant and more than likely be charged with aClass A misdemeanor. Anyone whose application is not deemed acceptablemay request a hearing before the commission relative to such rejection. Theperson who is rejected has 15 days to request a hearing.2. The exam fee and the application for the exam must be submitted to thetesting agency, Pearson Vue. You may also schedule your exam online and youcan find the link to that information at the end of this section. Be prepared toprovide your name and student ID number. At that time, the candidate hasscheduled a time to report to the center. Please make a note of it in case youare NOT reminded or sent confirmation. Bring 2 forms of ID. You will only beallowed to take the examination type you have applied for; no changes of theexamination type will be made at the testing center. Unscheduled candidates(walk-ins) will not be admitted! The passing grade for both the salesperson’sand broker’s exam is 70%. A time limit of 3.5 hours is set and allotted forcompletion of the required exam.3. All salesperson and broker applicants must complete all required courseworkprior to taking the state exam. Failure to do so will result in the applicant beingrequired to retake and pass the state exam after the coursework has beensuccessfully completed in order to be eligible to receive a real estate license.4

CRIMINAL RECORD SEARCHThe commission may charge any applicant a fee for a criminal record search of theapplicant in the same amount as is charged by the commission by the Departmentof Public Safety or any other agency for the search. The current fee is $25.00.RETURN OF LICENSEA corporation, partnership, or individually owned company may withdraw consentfor a broker or salesperson to continue doing business in its name by notifying thecommission and the broker or salesperson in writing and returning to thecommission the license of the broker or salesperson for whom consent is withdrawn.LICENSE RENEWALThe renewal form shall be mailed by the commission to the licensee’s place ofbusiness, if an active licensee or to their residence if an inactive licensee prior toAugust 1 for the final year of each license period. Each licensee shall notify thecommission in writing of any change in their business or residence address within 30days of the change.a. EXCEPTION: A person holding a current Alabama license who moves to andbecomes a resident of Alabama shall submit notice of change of address to thecommission within 10 days.b. If for any reason a licensee fails to receive a renewal form, it shall be theresponsibility of the licensee to notify the commission of this failure by August 10 ofthe renewal period.RECIPROCAL LICENSEIf you hold a current license in another state, you may obtain a reciprocal license asfollows:1. Complete a 6-hour course in Alabama real estate law as specified in Rule700-X-1-18.2. Take and pass the corresponding Alabama portion of the licensingexamination.3. Submit with the application official “Certificate of Licensure” form (licensehistory) documenting that you hold a current license in another state. Thiscertification can be obtained from the Real Estate Commission office in thatstate and must have been issued within 120 days of our receipt of yourreciprocal license application.4. Exam and dates will receive an application for licensure at the test centersupon passage of the exam.5

NON-RESIDENT AND OUT-OF-STATE CO-BROKERAGE1. A licensed broker of another state may act as co-broker of this state by writtenagreement specifying each parcel of property covered, if the state in which thenon-resident broker is licensed offers the same privileges to licensees of thisstate.2. Whenever an Alabama broker enters into a co-brokerage with a non-residentbroker to perform in Alabama, the Alabama broker shall file within 10 days acopy of the agreement with the commission. By signing the agreement, thenon-resident broker agrees to abide by Alabama law, and the rulescommenced against them in any court of competent jurisdiction in any countof Alabama in which a claim may arise.3. An Alabama licensed broker may enter into a co-brokerage agreement with abroker of another state. The Alabama broker shall require a listing or jointlisting of the property involved. The written co-brokerage agreements shallspecify all material terms of each agreement, including but not limited to itsfinancial terms.4. The Alabama broker shall supervise the showing of property located inAlabama and negotiations pertaining there to; all advertising of real estatelocated in Alabama, the name of the Alabama broker shall appear.5. The Alabama broker shall be liable for all acts of the out-of-state broker, as wellas for their own acts, arising from the execution of any co-brokerageagreement.6. The Alabama broker shall determine that the out-of-state broker is licensed asa broker in another state.7. The Alabama broker must hold all earnest money pertaining to aco-brokerage agreement in escrow unless both buyer and seller agree inwriting to relieve the Alabama broker of this responsibility.(END OF SECTION)6

Requirements for Salesperson LicenseA license for a broker or a salesperson shall be registered to a specific real estateoffice and shall be issued only to and held by a person who meets all of thefollowing requirements:1. Is trustworthy and competent to transact the business of a broker orsalesperson in a manner that safeguards the interest of the public.2. Is a person whose application or license has not been rejected or revoked inany state within 2 years’ prior on any grounds other than failure to pass theexam.3. Is at least 19 years old4. Is a United States citizen or is an alien with permanent resident status5. Has proof of high school graduation/diploma or equivalent6. Has proof of completion of a real estate course approved by the Alabama RealEstate Commission, which shall be a minimum of 60 clock hours.7. Any other information required by the ARECTime Requirements for Completing Course & Licensing Exam★ A student has one year to begin and finish the required 60-hour course. Thisincludes all course work and proctored course exams.★ After completing the course, a student then has 6 months to take and passthe state licensing exam.After Passing the ExamA person desiring an ACTIVE license:★ Within 90 days of passing the exam, must find a company to work for andsecure the Q Brokers signature on the application for a temporary activelicense. Once AREC processes the application, the temporary license is sent tothe company. The applicant is not officially licensed until their qualifyingbroker receives the active temporary license. It will be valid only for a period of6 months following the first day of the month after its issuance. From thatpoint, you will have 6 months to finish the 30-hour post license course. If youdo not complete it in the first 6 months, your license is placed on an inactivestatus. You cannot practice real estate with an inactive license. You then havean additional 6 months to complete the post license course. If you do notcomplete it within that time frame, your license will lapse and you must retakethe pre-license course and pass the state exam again.A person desiring an INACTIVE license:★ Within 90 days of passing the state exam, you will apply for an inactive license.AREC will process the application and send you notice of your inactive license.You will have one year to complete the post license course or risk your licenselapsing, requiring you to restart the process.7

Requirements for a Broker’s LicenseA person desiring to be a real estate broker in Alabama shall apply for a broker’slicense that will specify the real estate office to which they are registered. Along withthe application, they will need to submit all of the following:1. Proof that they had an active real estate salesperson’s license in any state forat least 24 of the 36 month period that immediately precedes the date ofapplication.2. Proof of completion of a course in real estate approved by the AREC, whichshall be a minimum of 60 hours.3. Any other information requested by the commission★ If you hold a reciprocal salesperson’s license, then you must either get abroker’s license in the state you were originally licensed in and then get areciprocal broker’s license in Alabama, or take the 60-hour pre-license coursein Alabama before taking the broker’s exam.★ The license of a salesperson (after being issued a broker’s license)automatically terminates upon the issuance of the broker’s license certificate.The salesperson’s license shall be returned to the commission in order for abroker’s license to be issued.Qualifying Broker★ A broker may serve as a qualifying broker for a salesperson or associate brokeronly if licensed in Alabama. Their principal business is that of a real estatebroker, and they shall be in a position to actually supervise the real estateactivities of the associate brokers’ or salespersons’ on a full time basis.★ A qualifying broker shall be held responsible to the commission and to thepublic for all acts of a salesperson and associate broker licensed under themand of each company for which they are the qualifying broker.★ A qualifying broker will be responsible to an injured party for the damagecaused from any violation by any licensee engaged by the qualifying broker.★ The qualifying broker’s supervisory responsibilities should not be construed ascreating an employer-employee relationship contrary to any expressed intentof the qualifying broker and licensee.★ A person who wishes to terminate their state as qualifying broker for alicensee may do so by notifying the licensee and the commission in writingand sending the licensee’s license to the commission, or verifying in writingthat the licensee has been lost or destroyed.★ A person who wishes to terminate their status as a qualifying broker shall payall funds over to their qualifying broker coming into their possession in trustfor other parties immediately upon receipt.Qualifying Broker for more than one company at the same location?● Someone desiring this must submit a letter of consent from all officers of bothcompanies and file said acknowledgement with AREC.8

Deposit FundsEach real estate salesperson or associate broker shall pay over to their qualifyingbroker, or the person designated by the broker, all funds coming into theirpossession immediately upon receipt. If past normal business hours, next businessday is acceptable.Qualifying brokers are allowed to hold the earnest money during the negotiations,but are responsible for the immediate deposit of the earnest money into a federallyinsured bank that is in Alabama once a contract is furnished.Such funds are to be held in trust, unless the qualifying broker is expressly relieved ofsuch responsibility in writing. Cash funds are to be deposited immediately. In theinstance of a large amount of earnest money, the purchaser could demand themonies to be placed in a money market account of the like for the duration of thenegotiations.Funds to be held in trust under a contract for sale involving more than one qualifyingbroker, ideally shall be held and deposited by the listing company. The law is ok withany of the qualifying brokers involved in the sale depositing money.Each qualifying broker shall promptly disburse to the appropriate party any trustmonies owed within 7 days of the consummation of the transaction for which thefunds were deposited. If, for any reason, the transaction is not consummated or thereis a disagreement where one or both parties refuse to sign the release, the brokercan turn those trust monies over to the courts. This is called an interpleader action.Death or Disability of Qualifying BrokerIf the qualifying broker dies or becomes disabled within 30 days, the company mustdesignate another qualifying broker. As an alternative, they may designate someonewho has had an active salesperson’s license for at least one year, to be the temporaryqualifying broker for up to 6 months from the date of death or disability of the formerqualifying broker. The fee for the temporary broker is $150.009

Company LicenseAn application for a company license for a corporation, partnership, or branch officeshall be made by a qualifying broker on a prescribed form. The qualifying brokerneeds to be an officer, partner or employee of the company. An applicant for acompany or broker shall maintain a place of business.If the applicant for a company or broker license maintains more than one place ofbusiness in the state, they shall have a company license for each separate location ofthe branch office and the name of its qualifying broker. Each branch office shall beunder the direction and supervision of a qualifying broker licensed at the address.Place of BusinessThe primary requirement is that a real estate office be located in an area zoned forbusiness or a police jurisdiction. There are two exceptions:1. a licensed broker living in a rural area of this state MAY operate a soleproprietorship from his/her home provided that they set up and maintain anoffice for the conduct of the real estate business. This may not be used forliving purposes or occupancy. The office need be used by the BROKER ONLY,and not as a place of business from which any additional licensee operates.The office shall have a separate business telephone, separate entrance, and beproperly identified as a real estate office.2. A handicapped broker, who is a sole proprietor, can enjoy the same exceptionas above regardless of zoning, police jurisdiction, etc.★ All licensees located within the city limits (or police jurisdiction of amunicipality) shall operate from a separate office located in the city limits.★ The office must have a designated business telephone and meet all otherregulations of the commission, as well as being properly identified as a realestate office.★ Hardship cases may be subject to waiver of this regulation upon approval bythe AREC. All business records and files shall be kept at the place of businessas required by law.(END OF SECTION)10

Continuing EducationThe holder of an original license who has satisfactorily completed the post licensecourse and whose original license has been issued will not be subject to thecontinuing education requirements for the first renewal of their original license.➢ Every licensee will expire at midnight on September 30thof the final year ofeach license period.➢ A licensee who fails to renew before the end of the 12-month period followingthe license period has a lapsed license and will be subject to all requirementsapplicable to persons who have never been licensed.➢ On or before September 30thof the final year, each applicant for renewal of anactive license is responsible for completing not less than 15 clocked hours ofapproved continuing education course work.➢ Our school will submit the hours you have completed to the Alabama RealEstate Commission electronically.➢ Of the 15 hours of continuing education required, 3 hours must be theprescribed Risk Management course while the remaining 12 may be electives.Exemptions from Continuing Education➢ - Continuing education requirements do not have to be met in order for alicense to be renewed on an inactive status; however, in order to activate thelicense, the licensee must complete 15 hours of CE.➢ In order to receive continuing education credit for legislative service, licenseemembers of the Alabama legislature should obtain an official record of theirservice during each license period from the clerk of the House ofRepresentatives or Senate.➢ This documentation must be filed in the commission office no later thanAugust 31 of the final year of the license period.Research and Education Fund Fee➢ The original research and education fee will be $30.00 and will be paid at thetime of all applications for original broker’s license and all applications fortemporary salesperson’s license. This is in addition to the original andtemporary license fee.➢ Renewal Research and Education Fee is $7.50 per year of license period ($15.00for license period).11

OffersA real estate licensee who is acting as an agent for a principal shall transmit to theirprincipal all written offers received regarding the property, as soon as possible and inthe order received (in the case of multiple offers).Estimated Closing StatementsThe licensee who procures a written offer from a buyer or presents a written offer to aseller in a residential transaction shall prepare and furnish them with a completedestimated closing statement at the timethe offer is signed. This statement must contain the licensee’s best estimates of allcosts they are expected to have at closing and the approximate amounts of thosecosts. The licensee will also furnish an actual detailed closing statement showing allreceipt of both statements by signature on the form.MisrepresentationA client is not liable for a misrepresentation made by a broker in connection with thebroker providing brokerage services unless the client knows or should have known ofthe misrepresentation or the broker is repeating a misrepresentation made by theclient to the broker.A licensee shall not be liable for providing false information to a party in a real estatetransaction if the false information was provided to the licensee by a client orcustomer of the licensee or by another licensee, unless the licensee knows or shouldhave known that the information was false (negligent misrepresentation).The duties of licensees as specified by the AREC shall supersede any duties of alicensee to a party to a real estate transaction that are based upon common lawprinciples of an agency to the extent that those common law duties are inconsistentwith the duties of licensees as specified in this article.(END OF SECTION)12

Disciplinary ActionsThe AREC or its staff may on its own, or on the verified complaint in writing of any person,investigate the actions and records of a licensee. The AREC may issue subpoenas andcompel the testimony of witnesses and the production of records during aninvestigation. If probable cause is found, a formal complaint will be filed and the ARECwill hold a hearing.The AREC shall revoke or suspend the license or impose a fine of not less than $100.00 ormore than $2,500.00, or both, or reprimand the licensee in each instance in which thelicensee is found guilty of any of the following acts:1. Procuring or attempting to procure a license for him/herself or another by fraud,misrepresentation or deceit, or by making a material misstatement of fact in anapplication for a license.2. Engaging in misrepresentation or dishonest or fraudulent acts when selling,buying, trading, or renting real property of their own or of a spouse, child or parent.3. Making a material representation, or failing to disclose to a potential purchaser orlessee any latent structural defect of any other defect known to the licensee.Latent structural defects and other defects do not refer to trivial or insignificantdefects, but refer to those that would be a significant factor to a reasonable andprudent person in making a decision to purchase or lease.4. Making any false promises of a character likely to influence, persuade, or induceany person to enter into any contractual agreement.5. Pursuing a continued and flagrant course of misrepresentation or the making offalse promises through agents, salespersons, advertising or otherwise.6. Publishing or causing to be published any advertisement which deceives or whichis likely to deceive the public or which any manner tends to create a misleadingimpression or which fails to identify the person causing the advertisement to beplaced as a licensed broker or salesperson.7. A licensed person may advertise property they own in the same way as any privateparty. However, the licensee must abide by all of the other provisions of the law inany and all real estate transactions that they are involved in, whether the subjectproperty is their own, the property of a spouse, child or parent, or is the property ofa member of the public.8. If a licensed person chooses to advertise their own property as if they are licensed,then all such advertising as well as all other activities must be conducted strictly inaccordance with the rules of the AREC.9. Acting for more than one party in a transaction without the knowledge andconsent in writing of all parties for whom they act.10. Failing within a reasonable time to properly account for or remit money cominginto their possession that belongs to others, or commingling money belonging toothers with their own funds. o Failing to deposit and account for (at all times)funds belonging to or being held for others in a separate federally insured accountat a financial institution in Alabama.13

11. Failing to keep (for at least 3 years) a complete record of funds belonging to othersshowing to whom the money belongs, date deposited, date of withdrawal, andother pertinent information. o IF the transaction is not consummated or if there isa disagreement about dispersal, the qualifying broker shall not disburse any trustfunds, except pursuant to a written agreement signed by all parties or pursuant toa court order. If the funds are to be disbursed, this should happen within 7 days.12. Placing a sign on any property offering it for sale, lease or rent without the consentof the owner.13. Failing to voluntarily furnish a copy of each listing contract, lease and otherdocument to each party executing the document with reasonable promptness.14. Paying or dividing any profit, compensation, commission or fee to or with anyoneother than licensee or multiple listing services.15. Paying or receiving any rebate from any person in a real estate transaction.16. Inducing any party to a contract to break the contract, for the purpose ofsubstituting a new contract, where the substitution is motivated by the personalgain of the licensee.17. If the licensee is a salesperson or associate broker, accepting a commission orother valuable consideration for performing any act for which a licensee isrequired from any person except their qualifying broker.18. Any advertising the salesperson may participate in, the company name must alsobe present and prominently displayed.19. Presenting to the AREC, as payment for fee or fine, a check that is returnedunpaid.Establishing an association by employment or otherwise, with anunlicensed person who is expected or required to act as a licensee or aiding,abetting or conspiring with a person to circumvent the requirements of thischapter.20. Misrepresenting or failing to disclose to any lender, guaranteeing agency or anyinterested party, the true terms of a sale of real estate.21. Failing to inform the buyer or seller at the time an offer is presented that they willbe expected to pay certain closing costs and the approximate amount of thosecosts.22. Having entered a plea of guilty or nolo contendere to or having been found guiltyof or convicted of a felony or crime involving moral turpitude.23. Having a final money judgment rendered against them which results from an actor omission occurring in the pursuit of their real estate business or involves thegoodwill of a real estate business.24. Offering free lots or conducting lotteries for the purpose of influencing a party topurchase or lease real estate.25. Failing to include a fixed date of expiration in a written listing agreement or failingto leave a copy of the agreement with the principal.14

26. Listing contracts shall contain no provision for automatic extensions27. Conduct that constitutes or demonstrates dishonest dealings, bad faith oruntrustworthiness.28. Acting negligently or incompetently in performing an act for which a person isrequired to hold a real estate license.29. Failing or refusing on demand to produce a document book or record in theirpossession concerning a real estate transaction conducted by them for inspectionby the commission or its authorized personnel or representative.30. Failing within a reasonable time to provide information requested by the ARECduring an investigation or after a formal complaint has been filed.31. Failing without cause to surrender to the rightful owner, on demand, a documentor instrument coming into their possession.32. If a qualifying broker or company fails to keep in their files copies of all contracts,leases, listings and other records pertinent to real estate transactions for a periodof 3 years.33. If it appears that a person, firm, corporation or any business entity has engaged, oris about to engage, in any act or practice constituting a violation of this chapter;the AREC, through the Attorney General, may institute legal actions to enjoin theact or practice and to enforce compliance with this chapter or any rules or order ofthe AREC.(END OF SECTION)15

Formal ComplaintsStaff of the AREC may, in response to a complaint from an outside party or upon itsown initiative, develop a formal complaint charging a licensee or timeshare sellerwith any violation of AREC rules or regulations where there is probable cause tobelieve such a violation occurred.A formal complaint drawn by the AREC shall include at least the following:1. The name of the party against whom the complaint is being made2. The legal authority and jurisdiction under which the charge is made3. The type of licenses held by the accused party and the date each license wasissued and/or in the case of a charge of violation by a timeshare developer orowner, the date the respective timesharing plan was registered.4. The particular section(s) of the law and/or the specific rule or order alleged tohave been violated5. A brief description of the act(s) or omission(s) upon which each allegation ofviolation is made.6. The AREC shall notify the licensee and qualifying broker in writing regardingthe complaint.7. The AREC shall notify the complaint, licensee and qualifying broker in writingregarding the disposition of the complaint.(END OF SECTION)16

Hearings➢ A hearing officer appointed by the AREC shall conduct all hearings on contestedcases before the AREC. If a formal complaint is filed against a licensee, the AREC mayproceed to hold a hearing at its discretion if the party or parties initiating thecomplaint and the party or parties against whom the complaint was made reach asettlement and wish the complaint withdrawn.➢ An action against an accused shall begin by serving them, either personally or bycertified mail, with a copy of the formal complaint against them. The accused will begiven at least 15 days’ notice of the time, date and place of hearing. If the ARECrefuses to license an applicant, notice of the refusal will be given and they may,within 15 days, file a request for a hearing.➢ The applicant or accused will have an opportunity to be heard in person or bycounsel to offer testimony on their behalf and to examine witnesses.➢ Hearing will be held in the county in which the applicant resides or where theymaintain their principal place of business unless they agree to be heard in anothercounty. If they do not maintain their place of business in Alabama, then the hearingwill be held in their county of residence. If they neither reside nor maintain a place ofbusiness in Alabama, the hearing will be held in Montgomery County.➢ The AREC will render a written order within 39 days for the final date of hearing. Ifthe matter alleged in the complaint is the subject of an action pending in court, theAREC may withhold rendering its order pending deposit of the court action. Asubpoenaed witness who appears in a proceeding will receive $20.00 per diem, and$0.56 per mile from home to the place of hearing and return.➢ An accused who is aggrieved by a final decision may file for re-hearing within 30days of receiving notice of the decision. Within 30 days from the filing, the AREFCwill set a hearing date, will enter an order without a hearing, or will grant or deny theapplication. If the applicant is granted a re-hearing, the AREC will schedule it as soonas practicable.➢ If the AREC does not enter an order within 30 days from the filing, the applicationwill be denied.Appeals➢ Findings of the commission are final unless within 30 days’ the applicant filesa notice of appeal. A party appealing a decision will post a $200.00 appealbond with the circuit clerk of the circuit court.➢ The appeal will be conducted by the court without a jury and will be confinedto the record. The AREC’s decision will be taken as prima facie just andreasonable and the court shall not substitute its judgment for that of theAREC as to the weight of the evidence on questions of fact.➢ Any person or company who violates any provision of this chapter commits aClass “A” misdemeanor and; on conviction, shall be punished accordingly. TheAREC may impose a fine of not less than $100.00 or more than $2,500.00 orrevoke or suspend the license or give a written reprimand17

Real Estate CommissionThe Alabama Real Estate Commission consists of 9 members:➢ One from each congressional district (7)➢ One at large who must be black➢ One at large who represents consumersThe Commissioners➢ Must have been a real estate broker or salesperson for at least ten years➢ Must have been a resident of Alabama for at least ten years➢ Will not be liable for damages, etc.➢ Are paid $300.00 per month plus the same per diem and travel allowance paidto state employees for each day they meet to conduct official business.➢ Are appointed by the governor with the advice of the Senate➢ Serve five year terms➢ Cannot serve more than two consecutive terms➢ Appointments expire on September 30 of the final year of the termIn the event of an office inspection of a real estate company, its qualifying brokershall ensure that the business records required to be kept under state law are madeavailable to AREC representatives. The AREC representatives at the AREC’s expensemay take photocopies of records that the licensee is required to maintain by theAlabama License Law or by the Rules and Regulations of the AREC.(END OF SECTION)18

Recovery FundThe Recovery fund was established as a new way for the public to recover damagesfrom licensees when they have obtained a judgment against a licensee and areunable to collect otherwise.➢ When a person makes an application for a temporary active license as abroker or salesperson, they shall pay in addition to all other fees a $30.00deposit into the Recovery Fund.➢ Payment for a claim based on a judgment or settlement against any oneperson will not exceed $25,000.➢ Payments for multiple claims arising out of the same transaction will notexceed $25,000 per instance, or $50,000 in the aggregate (total paid out),regardless of the number of claimants.➢ A salesperson, upon obtaining a broker’s license, will not be required to pay anadditional Recovery Fund fee.➢ When the balance remaining in the Recovery Fund is less than $500,000, eachactive licensee shall, on order of the commission, pay a fee of $30 per licensefor deposit into the Recovery Fund.➢ A licensee on inactive status shall NOT be required to contribute to the fund. Afee of $30.00 shall be paid at the time the license is activated.When an aggrieved person commences an action for a judgment that may result in collectionfrom the Recovery Fund, the aggrieved person shall notify the AREC in writing, certified mail withreturn receipt requested, to this effect at the time of the commencement of the actions. When theAREC receives the notice, it may settle or compromise the claim. Any expenses incurred by theAREC in defending, satisfying, or settling any claim shall be paid from the Recovery Fund. Whenan aggrieved person recovers valid judgment in a court against a licensee, the AREC mayterminate all licenses of the licensee. The AREC may refuse to issue a new license to the formerlicensee until they have repaid in full, plus 12% interest, the amount paid from the Recovery Fund.A discharge in bankruptcy will NOT relieve a person from the penalties and disabilities provided inthis section.The AREC may transfer funds one time only from the Recovery Fund to the University ofAlabama Real Estate Research and Education Center. The amount of the transfer may not reducethe Recovery Fund below $600,000. Each licensee shall notify the AREC within 10 days after noticeto them of any criminal prosecution against them, or of a civil summons and complaint againstthem, if the matter involved a real estate transaction or the goodwill of an existing real estatebusiness. The notification shall be in writing, by certified mail, and shall include a copy of thesummons and complaint. If a licensee receives notice that a verdict has been rendered againstthem, or that a criminal or civil action has been dismissed, the licensee shall notify the AREC in thesame way stated above.(END OF SECTION)19

RECAD(Real Estate Consumer Agency Disclosure Act)**TO MYRES’ PRE-LICENSE STUDENT, THIS INFORMATION GOES WITH CHAPTERS 9 & 10 ANDWILL NOT MAKE SENSE TO YOU UNTIL YOU HAVE COMPLETED THOSE CHAPTERS.**While Agency Statues around the country are different from each other, the spirit is the same inall and there are only slight variations from state to state. Below you will find RECAD, Alabama’sAgency Statues, explained. As a student, just understand that the primary differentiations fromstate to state and within each state’s Agency Statues are simply how each state handles theconflict of interest.As you will learn, Alabama allows the conflict of interest (Company representing both buyer andseller in the same transaction) with certain caveats and Alabama refers to this situation as aLimited Consensual Disclosed Agency. Some other states refer to this conflict of interest(andallow with certain caveats) as a Designated Agency.Under a Designated Agency model, the company still provides full representation to both buyerand seller, essentially designating in house a salesperson to represent the buyer and asalesperson to represent the seller. Again, with each salesperson providing whatever fullrepresentation is in that state.Under a Limited Consensual Disclosed Agency in Alabama, the company, with consent fromboth parties, becomes neutral. NOT providing full representation, but effectively at that point,becoming just a facilitator.(END OF SECTION)20

AREC Rules Governing Agency DisclosureEach offer to purchase prepared after August 1, 1998, shall have prominentlydisplayed the following Agency Disclosure clause that shall be completed andinitialed as indicated:The Listing Company _______________________is: (2 blocks may be checked)___ An Agent of the Seller___ An Agent of the Buyer___ An agent of both the seller and buyer and is acting as a Limited Consensual DualAgent___ Assisting the buyer/seller as a Transaction Broker (proposed to be changed to“Transaction Facilitator.”)Terms & Definitions, relating to RECADAgency Agreement – A written agreement between a broker and a client thatcreates a fiduciary relationship between the broker and a principal, who is commonlyreferred to as a client.Broker – Any person licensed as a real estate broker.Brokerage Agreement – specific written agreement between a brokerage firm and aconsumer that establishes a brokerage relationship.Brokerage Services – Any service, except for rental or property management services,provided by a broker or licensee to another person and includes all activities forwhich a real estate license is required.Consumer – A person who obtains information, advice, or services concerning realestate from a real estate licensee.Client – A person who has an agency agreement with a broker for brokerage service,whether they are a buyer or a seller.Customer – A person who is provided brokerage services by a broker or licensee butwho is not a client of the broker.Dual Agency – An agency relationship in which the same brokerage firmcircumstances, which establish a dual agency, include but are not limited to one ofthe following:- When two or more licensees licensed under the same broker each represent adifferent party to the transaction ‘- When one licensee represents both the buyer and seller in a real estatetransaction.Informed Consent – A consumer’s agreement to allow something to happen which isbased upon full disclosure of facts needed to choose appropriate brokerage services.21

Licensee – Any broker, salesperson or company.Limited Consensual Dual Agent – A licensee who, with the written informed consentof all parties to a contemplated real estate transaction, is engaged as an agent forboth the buyer and seller.Material Fact – A fact that is significant to a reasonable party that affects the party’sdecision to enter into a real estate contract.Qualifying Broker – A broker under whom a corporation, partnership or branch officeis licensed, or a broker licensed to do business as a sole proprietorship that isresponsible for supervising the acts of all real estate licensees licensed therewith.Real Estate Transaction – the purchase, sale, lease and rental option or exchange ofan interest in real estate.Single Agent – A licensee who is engaged by and represents only one party.Sub Agent – A licensee who is empowered to act for another broker in performingreal estate brokerage tasks for a principal, and who owes the same duties to theprincipal as the agent of the principal.Transaction Broker – A licensee who assists one or more parties in a contemplatedreal estate transaction without being an agent or fiduciary or advocate for theinterest of that party to a transaction.Roles & Duties of Licensees- When engaged in any real estate transaction, the licensee may act as a singleagent, sub agent, a limited consensual dual agent, or as a transaction broker.- At the initial contact between a licensee and the consumer, and until such time abroker enters into a specific written agreement to establish an agency relationshipwith one or more parties, the licensee shall not be considered an agent of thatconsumer. An agency relationship shall not be assumed, implied or created withouta written bilateral agreement establishing the terms of the agency relationship.- The licensee shall provide a written disclosure form (RECAD) to consumer, a formdescribing alternative types of brokerage services that are provided by theircompany as SOON AS REASONABLY POSSIBLE after first contact, and before anyconfidential information is disclosed to any other person by licensee. A broker shallnot be required to offer or engage in any one of the alternative brokeragearrangements specified. The licensee is required to sign this form. The consumer isasked to sign, but are not required to.- A licensee shall not be required to comply with the provisions of the paragraphabove when engaged in transactions with any company or governmental entityversus a person in transactions involving real estate.- After disclosure, the consumer may make a choice of a specific type of brokeragearrangement that is available from the real estate company. The agreement shallcontain a statement of the terms and conditions of the services that the broker willprovide in the absence of a signed agreement so that the transaction brokeragerelationship will remain in effect.22

- As a transaction broker, the duties of the licensee are limited. A signed brokerageagreement, or in the absence of an agreement, the continuation of the transactionbrokerage relationship shall constitute informed consent by the consumer as to theservices they will receive from the broker.- Disclosure forms shall be provided to buyers and sellers. All real estate firmsoperating within the state of Alabama will use the same agency disclosure forms.Disclosure forms describing the alternative types of brokerage services identifiedabove shall be written by the Alabama Real Estate Commission.- A broker who represents more than one client in a transaction owes the dutiesspecified above to each client except where the duties to one will violate thefiduciary duties of the licensee to other clients. A broker may provide brokerageservices as a limited consensual dual agent only with prior written informed consentof all clients.Agency Disclosure Office PolicyAny broker acting in a real estate transaction shall adopt a written agency disclosureoffice policy that specifically enumerates the types of brokerage servicearrangements a licensee may offer or accept. Any format for the office policy isacceptable including the use of devices such as loose-leaf ring notebooks.- The qualifying broker for each brokerage company shall provide every licensee acopy of the agency disclosure policy regarding the types of brokerage servicesoffered by their company. This policy shall be explained to all licensees at least once ayear.- Each licensee shall sign a form acknowledging receipt of the office policy statementand a satisfactory explanation of its contents, and a copy retained by the brokeragecompany for 3 years. - Under RECAD, a qualifying broker may choose to offer thefollowing services to the public: single agency, sub agency, limited consensual dualagency, and transaction brokerage. Under RECAD, a qualifying broker is not limitedto offering only one of these and is not required to offer all of these services.- All qualifying brokers shall include in their office policy a copy of the disclosure formrequired by the Alabama Real Estate CommissionObligation of LicenseesLicensees has the following obligations to all parties in a real estate transaction:- To provide brokerage services to all parties honestly and in good faith.- To exercise reasonable skill and care in providing services to all parties.- To keep confidential information given to the licensee in confidence, or anyinformation obtained by the licensee that they know a reasonable person wouldwant to keep confidential; unless disclosure of this information is required by law,violates a fiduciary duty to a client, becomes public knowledge or is authorized bythe party in writing.- To account for all property coming into their possession that belongs to others.- When assisting a party in the negotiation, to present all written offers in a timely23

and truthful manner and in order received.- To act on behalf of the licensee or their immediate family, or on behalf of any otherindividual in which the licensee has a personal interest, only with prior timely writtendisclosure of this interest to all parties.- A licensee may provide requested information that affects a transaction to anyparty who requests the information, unless disclosure is prohibited by law or in thisarticle.Services Licensees are Required to Provide Clients- Loyally represent the best interests of the client by placing their interest ahead ofthe interests of any other party, unless loyalty to the client violates the duties of thelicensee to other parties or is prohibited by law.- Disclose to the client all information known by the licensee that is material to thetransaction and not discoverable by the client through reasonable investigation andobservation, except for confidential information. A licensee will have no affirmativeduty to discover the information.- Fulfill any obligation required by the agency agreement and any lawful instructionsof the client that are within the scope of the agency agreement that are notinconsistent with other duties as enumerated in this article.(END OF SECTION)24

REAL ESTATE BROKERAGE SERVICES DISCLOSURE*Alabama law requires you, the consumer, to be informed about the types of services which real estatelicensees may perform. The purpose of this disclosure is to give you a summary of these services.A SINGLE AGENT is a licensee who represents only one party in a sale. That is, a single agentrepresents his or her client. The client may be either the seller or the buyer. A single agent must becompletely loyal and faithful to the client.A SUB-AGENT is another agent/licensee who also represents only one party in a sale. A subagenthelps the agent represent the same client. The client may be either the seller or the buyer. Asubagent must also be completely loyal and faithful to the client.A LIMITED CONSENSUAL DUAL AGENT is a licensee for both the buyer and the seller. This may onlybe done with the written, informed consent of all parties. This type of agent must also be loyal andfaithful to the client, except where the duties owed to the clients conflict with one another.A TRANSACTION BROKER assists one or more parties, who are customers, in a sale. A transactionbroker is not an agent and does not perform the same services as an agent.*Alabama law imposes the following obligations on all real estate licensees to all parties, nomatter their relationship:1. To provide services honestly and in good faith;2. To exercise reasonable care and skill;3. To keep confidential any information gained in confidence unless disclosure is required bylaw or duty to a client, the information becomes public knowledge, or disclosure isauthorized in writing;4. Present all written offers promptly to the sellerAnswer your questions completely and accurately.Further, even if you are working with a licensee who is not your agent, there are manythings the licensee may do to assist you. Some examples are:- Provide information about properties - Assist in making a written offer;- Provide information on financing; - Show propertiesYou should choose which type of service you want from a licensee, and sign a brokerageservice agreement. If you do not sign an agreement, by law the licensee working withyou is a transaction broker.The licensee's broker is required by law to have on file an office policy describing thecompany's brokerage services. You should feel free to ask any questions you have.The Alabama Real Estate Commission requires the real estate licensee to sign, date, andprovide you a copy of this form. Your signature is not required by law or rule, but wouldbe appreciated.*******************************************************************************************************Name of Licensee ________________________________Signature ________________________________________ Date _______________Consumer Name ________________________________Signature ________________________________________ Date __________________(Acknowledgment for Receipt Purposes Only)25

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