Alabama Law Test Outline
40 Questions 28% of test
Steve McTyeire, Broker
205-807-5200
SteveMcT@gmail.com
NewLocationRealty.com
Update – Advertising Points
http://www.arec.alabama.gov/pdf/Update/update-fall-2009.pdf
CAN_SPAM Law
http://www.ftc.gov/bcp/edu/microsites/spam/business.htm
Do Not Call List
https://www.donotcall.gov/faq/faqbusiness.aspx
Rebates & Kickbacks
http://www.arec.alabama.gov/legal/briefly-legal.asp#GiftsRebatesKickbacks
License Law Deadlines
http://www.arec.alabama.gov/pdf/deadlines-for-commission-may2009.pdf
Home warranty payments to agents
http://www.arec.alabama.gov/pdf/Update/fall-2010-update.pdf
Commissioners
http://www.arec.alabama.gov/about/commissioners.asp
NewLocationRealty.com
Class Files
http://newlocationrealty.com/School.html
Alabama Real Estate Commission
http://www.arec.alabama.gov/index.asp
Law Book
http://acre.cba.ua.edu/license_index/License_Law.html
1.The Real Estate Commission
A. Purpose
34-27-1
B. Composition (Commissioners,
Administrative, Staff)
34-27-7
1.The Real Estate Commission
A. Purpose
Protect the public
Regulate the business
Require license as proof of qualification
1. The Real Estate commission
B. Composition (Commissioners,
Administrative, Staff)
9
1
1
1
members =
from each Congressional District (7)
person – not licensed
Black person - rotates among Districts
Appointed by governor
Confirmed by Senate
5 year term – 2 term limit
21 years old
Resident of state at least 10 years
No real estate law, or felony convictions
Owner of real property
Link to Commissioners
2. Definitions 34-27- 2
Associate Broker
Any broker other than a qualifying broker
Broker
Any person licensed as a
real estate broker under this article
Commission
The Alabama Real Estate Commission
Or a fee paid to a broker
Commissioner
A member of the Commission
Company
Lawful business organization
Engage
Contractual relationship between
qualifying broker and salesperson
May be employee or independent contractor
Inactive License
License being held
By the commission office by law
By order of the commission
By request of licensee
License is not valid because it was not renewed
Licensee
Any Broker, Salesperson or company
License Period
Oct 1 to Sept 30 renews on odd years
Must renew by Aug 31 or $150 penalty
Person
A natural person
Place of Business
Rural broker may operate from home if:
Separate entrance, phone and signage
No other salespersons
Business in city limits
Separate office, phone, and signage
Zoned commercial
Records shall be kept at office
Qualifying Broker
Broker under whom a lawfully constituted
business organization operates
Recovery Fund
The Alabama Real Estate Recovery Fund
Salesperson
Any person licensed under article 1 or 2
3. Licensing Requirements
A. Activities that require a license and
Those who are exempt
B. Co-brokering
C. Qualifications for a license
D. Renewal of license
E. Continuing Education
F. Post License Education
G. Temporary and Original Salesperson license
License required if performing for another
in Alabama:
B
A
R
N
Buy
Aid
Rent
Negotiate
S
A
L
E
Sell
Auction
Lease
Exchange
3. Licensing Requirements
A. Activities that require a license
if performed for another
Sell, exchange, purchase, rent, or lease real
estate situated within Alabama
Offer to sell, exchange, rent, or lease real
estate situated in Alabama
Negotiate or attempt to negotiate the listing,
sale, exchange, purchase, rental, or leasing of
real estate situated in Alabama
3. A Required
List or offer or attempt or agree to list
real estate for sale, rental, lease, exchange,
or trade situated in Alabama
Auction, offer, or attempt or agree to
auction real estate situated in Alabama
Buy or sell or offer to buy or sell,
or otherwise deal in options
on real estate situated in Alabama
3. A Required
Aid, attempt, or offer
to aid in locating for purchase,
rent or lease any real estate situated in Alabama
Procure or assist in procuring of prospects
for the purpose of effecting the sale, exchange,
lease, or rental of real estate situated in Alabama
Present himself or herself
as being able to perform these acts
License not required:
Sell or manage personally owned property
or that of a spouse, child or parent
Attorney performing attorney duties
Acting without compensation under a
power of attorney
Receiver, trustee, executor, or guardian; or
acting under court order,
or authority under a will or trust
License not required:
Public officers performing their duties
Persons performing administrative duties
for broker – No BARN SALE
Persons acting as apartment manager
Exception:
Condominium manager needs license
License not required:
Persons licensed as time share sellers
Different license
Transactions involving sale or lease
of cemetery lots
3 B Out of state co-brokerage
Alabama broker shall require joint listing
Specifying terms (file with Commission 10 days)
Showing and negotiating shall be
supervised by Alabama broker
Advertising shall have Alabama broker’s name
Alabama broker shall be liable for acts of
out of state broker
Alabama broker to determine license status of
out of state broker
Earnest money to be held by Alabama broker
may except this in writing
3C Qualifications for license
Registered to specific real estate office
Trustworthy
Person whose application has not
been rejected or revoked in another state
within 2 years except for failing exam
19 years old
US Citizen or legally present
If non Alabama resident,
Agree to Alabama jurisdiction
3C Qualifications for license
High school graduate or equivalent
Proof of 60 hour real estate class
Application for company license shall be
made by qualifying broker
Company must maintain a place of business
Second company location must have separate
Broker
Company license
3C Qualifications for license
No person may serve as qualifying broker
for more than one company unless:
All companies consent in writing
File this consent with Commission
Must be in same location
3D Renewal of a license
License period October 1 to September 30
Must renew by August 31 or incur $150 penalty
License period is 2 years renewing in odd years
Salesperson $85 / year
Broker
$95
If notice not received about renewal:
It is the responsibility of licensee to notify
Commission
3E Continuing Education (CE)
Active status renewal requires
12 hours of elective credit
3 hours of Risk Management
Must be completed by September 30
of renewal year or
License will become inactive
No exam required for CE
Can stay inactive, but must complete
Continuing education to reactivate
3F Post License Education
Must complete post license 30 hour class
Before applying for Original License
In class or online
Covers application of business
Sellers, Buyers, Financing, ect.
3G Temporary and Original License
New licensee must get temporary license
Within 6 months and
Before attending Post License class
Temporary license expires at the
end of the sixth month following issuance
Example License Issued January 5th
Expires end of February plus 6 months
Expires at the end of August
Must complete Post License 30 hours
Before license goes inactive September 1st
in this example, your date may differ
If Post License not completed, then
Temporary License becomes inactive and
will expire 6 months later
4 License Status
A. Transferring a license
B. Inactive Status
C. Reactivation of License
4A. Transferring a license
Must notify current broker in writing
AREC.gov to change online
Go inactive
Activate with new broker
$25 + $4 service charge
$25 charge for any change to license
Inactive to Active, name, firm
4B Inactive Status
Automatic Inactive for failing to meet
September 30 deadline to renew
If not renewed within next 12 months
License Lapses
Must start over
May stay inactive, but must renew and pay
Continuing Education need not be done
4C Reactivation of License
May stay inactive as long as you want
To activate:
Must meet current 15 hour CE
Get broker
$25
5. Broker & Company License
Place of Business
A.
B.
C.
D.
E.
F.
G.
H.
I.
Issuance of company and branch office licenses
Issuance of broker licenses
Who may serve as a qualifying broker (QB)
Responsibilities of qualifying broker (QB)
Termination of QB status
Serving as QB for more than one company
Temporary QB
Associate broker status
Operating from home
5A Issuance of company and branch office licenses
Each company location must have a
Company license
QB at location
Company QB and branch QB share responsibility
5B Issuance of broker licenses
Been salesperson 24 of last 36 months
High school or equivalent
60 Broker Course
Original broker license
Registered to specific real estate office
Reciprocal license
6 hour of Alabama Law & 40 question test
5C Who may serve as a qualifying broker (QB)
Meet all broker qualifications, plus
Must be principal business
In position to supervise full time
5D Responsibilities of qualifying broker (QB)
Responsible for all acts of salespersons
Responsible for damages caused by salespersons
Duty to see all transactions comply with law
Does not create employer- employee relationship
5 E Termination of QB status
QB may terminate status with written notice to:
Parent company
Commission
QB may terminate agent by:
Notifying in writing:
Licensee
Commission (AREC)
Return license to AREC
5F Serving as QB for more than one company
QB may serve at only one company;
Unless:
All companies consent in writing
File consent with AREC
Must all be in same location
Sales or property management
Salespersons licensed under broker
may work with all companies in that location
5G Temporary QB
Company license becomes invalid upon
Death or disability of QB
Within 30 days company may designate a
Person to act as Temporary QB
may be a salesperson with 1 year experience
May operate under Temporary QB for 6 months
5H Associate broker status
Any broker other than QB
5 I Operating from home
Company or broker license must maintain
Place of business
Broker living in a rural area may operate from home
IF
Set up and maintain a office to conduct business
May not be used for living purposes
Separate telephone, entrance, signage
Broker only
No salespersons may operate from office
Real Estate Blues
6 Recovery Fund
A. Purpose of the fund
B. Payment into the fund
C. Payment from the fund
6A Purpose of the fund
An aggrieved party may recover
actual or compensatory damages
As a result of conduct in violation of RE law
not interest or court cost
will not pay broker or salesperson
where acting on own behalf
N/A to time share
6B Payment into the Recovery Fund
At application for original license for
Salesperson or broker, each applicant shall pay
$30 into the Recovery Fund
One Time
A salesperson who has paid into the fund
will not be required to pay again
when obtaining a broker license
When balance of fund drops below $500,000
Each active licensee will pay additional $30
6C Payment from the Recovery Fund
When an aggrieved person recovers a valid
Judgment against a licensee
Will file claim in court and request payment
From Recovery Fund 10 days
Payment will be limited to
$50,000 in the aggregate
(total claim against a licensee)
Limit of $25,000 per transaction
License will be revoked until money is repaid
By licensee
7 Disciplinary Actions and Process
A.
B.
C.
D.
E.
Complaints
Hearings
Disciplinary Actions
Rehearing
Appeals
7A Complaints
AREC will investigate a verified complaint
for probable cause
Requirements for complaint:
Is person licensed
What violations may have occurred
Complaint will include
Name of persons whom complaint is made
Legal authority and jurisdiction
Type and date of issue of license
Section violated
34-27-10
Brief description of acts or omissions
7B Hearings
If probable cause is found:
AREC will hold a hearing on the complaint
Accused will be given 15 days notice
May issue subpoenas (cost apply)
Pays mileage
AREC will issue ruling within 30 days
7C Disciplinary Actions
Any violation of this act is a Class A misdemeanor
Punishable by a fine of:
$100 up to $2500
Suspend or revoke license
May require Risk Management class
Require restitution
7D Rehearing
If Accused or other party is not happy with decision
They may:
Ask for a rehearing within 30 days
If no response in 30 days, request is denied
Rehearing does not modify
the effective date of decision
7E Appeals
Findings of AREC are final after 30 days unless
An appeal is filed during this time
Put up $200 appeal bond
Decision may be stayed during appeal
Within 30 AREC will file with court
Court will hear without jury
Losing party pays cost
8 Estimated Closing Statement
Net Sheet
The licensee who procures a written offer
in a single family residence shall prepare
an itemized statement of all cost associated
with the sale based on best estimates
Seller or Buyer – your side only
No need to have other parties net sheet
Signed and kept on file for 3 years
Licensee also required to furnish a detailed
Closing statement HUD1 at closing
9 Trust Funds
Deposit and accounting of all funds at all times belonging to others
Unless relieved in writing
In a separate account in a federally insured bank in Alabama
Broker shall be a customer of bank and
have authority to write checks and make deposits
Salespersons pay over to broker all funds immediately
Records must be kept for 3 years
9 Trust Funds
Funds held in trust under contract
May be held by either broker
Cash – deposit immediately
Check – may be held by either broker
Check to be deposited when contract states
Or
Check to be deposited when offer becomes contract
9 Trust Funds
Other trust funds shall be disbursed within 7 days
If transaction fails to transact or dispute arises,
Written agreement required before broker may disburse
Property management has 21 days to account
for security deposit at end of lease
Property management company gets new broker
Must account for and transfer trust to new broker
10 RECAD
Real Estate Consumer Agency Disclosure
Definitions:
Agency Agreement must be in writing
Creates fiduciary relationship
Consumer – person who obtains services
Client – Agency – work for, advise
Customer – transaction broker, work with
10 RECAD
Dual agency – work for both
Limited Consensual Dual Agency
Must be in writing
Happens when:
1 agent represents both sides
Agents with same firm represent both sides
10 RECAD
Informed consent - consumer acts based
On full disclosure
Material Fact- One that is significant to
a reasonable person – affects sale
10 RECAD
No implied agency
Transaction Broker if no signed agreement
As soon as reasonably possible, before licensee
Discloses confidential information to another,
Shall provide written disclosure form describing
Different forms of representation including
Those offered by firm
After disclosure consumer may choose
10 RECAD
Transaction broker – assist the transaction
Single agent – works for one side
Dual agent – works for both sides – consensual
Sub agent – pre RECAD representation where
everyone worked for the seller
10 RECAD
Duties to
all:
Provide service honestly and in good faith
Exercise reasonable care
Keep confidential information confidential
Account for all property that belongs to others
Present written offers timely and truthful
Licensee’s interest must be disclosed
10 RECAD
Duties to
clients:
In addition to duties to all,
Loyalty – client’s interest first
Disclosure – tell client what you know
Good and Bad – Better decision
No duty to discover information
Follow lawful instructions of client
10 RECAD
All RE firms
use same form
10 RECAD
Office policy
Broker will adopt written policy for
Services offered under RECAD
Policy will be explained every year and
Signed by agent
Kept on file for 3 years
10 RECAD
Exempt
Property Management
Sales involving artificial entities
Government, companies, ect.
11 Violations which may result in disciplinary actions
A. Misrepresentation and dishonest dealing
1. Failure to disclose known defects that effect
Health & Safety
B. Inducing a party to break a contract
C. Advertising
D. Listing Agreements
E. Failure to give proper disclosure
F. Keeping appropriate records
G. Rebates
H. Paying or receiving commissions
from unlicensed persons
I. Bad Checks
J. Failure to inform Commission of suit and disposition
K. Lotteries
L. Handling of documents
M. Violation of rule or order of Commission
N. Offers
11A Misrepresentation and dishonest dealing
Conduct that constitutes or demonstrates
Dishonest dealings, bad faith, or
untrustworthiness
Engaging in dishonest or fraudulent dealings
when dealing with own property or
that of a spouse, child or parent
Misstatement on application about felony
11A 1 Failure to disclose known
defects that affect health and safety
11B Inducing a party to break a contract
For the purpose of substituting a contract
motivated by the personal gain of the
licensee
11C Advertising
Must be truthful
Must contain licensee name
Must contain Brokerage name
Rule on letter size has been changed to
Brokerage name must be prominent in ad
Rules apply to all media
Additional information required for web
11D Listing Agreements
May be Agency or Not
Must include expiration date
No auto renew
Must leave copy with seller
No “net listings”
11E Failure to give proper disclosure
Latent defects
Health & Safety Issues
Lead Paint Disclosure
Net Sheet
Personal interest in property
Alabama has no law on seller disclosure forms
or stigmatized properties
11E Failure to give proper disclosure
Alabama is Caveat Emptor “let the buyer
beware”
Buyer has duty to inspect
Exceptions to buyer beware:
Written on HAND
H Health & Safety
(Known)
A Assumption of Duty (buyer’s agent)
N New Homes
(warranty)
D Direct Question
(must answer)
11E Failure to give proper disclosure
This box is in every general residential sales contract
11F Keeping appropriate records
Keep all records 3 years
11G Rebates
Illegal to pay or receive rebates in any
real estate transaction
Also violation of Federal RESPA law
11H
Paying or receiving commissions
from unlicensed persons
Licensees may be paid only by their broker
11I Bad Checks
Presenting a bad check to the AREC
will cost you $250
11J Failure to inform Commission
of suit and disposition
Must inform AREC within 10 days of arrest
or suit and its disposition
11K Lotteries
Illegal to offer free lots
or conduct lotteries
for the purpose
of influencing a party to purchase
11L Handling of Documents
Illegal to fail to furnish a copy of each document
to each party executing such
Must keep copies for 3 years
Listing must be left with seller at signing
Failing without cause to surrender
to the rightful owner on demand
a document coming into licensee’s possession
11M Violation of rule or order of Commission
Illegal to violate any provision of this rule, law
or order of the Commission
11N Offers
Licensee acting as agent shall transmit
all written offers to the principal