HB230INTRODUCED
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HB230
GMSP226-1
By Representative Shedd
RFD: Commerce and Small Business
First Read: 06-Feb-25
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5 GMSP226-1 02/6/2025 TRP (L)bm 2025-152
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First Read: 06-Feb-25
SYNOPSIS:
Under existing law, a licensee of a real estate
transaction must provide a written disclosure form to a
consumer describing the types of brokerage services, as
required by the Real Estate Consumers Agency and
Disclosure Act (RECAD), prior to a consumer disclosing
any confidential information. This form is adopted by
the Alabama Real Estate Commission. In addition, a
licensee must inform the consumer of the brokerage
services specifically provided by the licensee's
company. A written agreement is required to establish
an agency relationship but is not required to establish
a transaction brokerage relationship.
Pursuant to the National Association of Realtors
(NAR) settlement agreement approved by the U.S.
District Court for the Western District of Missouri,
NAR created a new rule requiring brokers working with
prospective buyers to enter into a written agreement
with the prospective buyer prior to the prospective
buyer touring a home. This requirement conflicts with
existing law.
In response to recent changes in industry
practices, this bill would provide that a consumer must
receive a disclosure form from the licensee prior to a
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receive a disclosure form from the licensee prior to a
real estate licensee showing him or her a property; and
the disclosure of the specific brokerage services the
licensee's company provides must be in writing and
include general information related to compensation of
the licensee.
This bill would provide that after the
disclosure, a consumer retains the option to enter into
a brokerage agreement with the brokerage company;
however, the consumer is not required to enter into a
written brokerage agreement as a prerequisite to the
licensee showing him or her a property.
This bill would further provide that a licensee
and consumer are only required to execute a written
brokerage agreement if the licensee will either list
the property for sale or submit an offer to a seller on
behalf of the consumer; and any brokerage agreement
entered into must provide terms of compensation to the
licensee and company.
This bill would further provide that a referral
agreement between real estate licensees must be in
writing.
A BILL
TO BE ENTITLED
AN ACT
Relating to real estate transactions; to clarify when a
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Relating to real estate transactions; to clarify when a
real estate consumer agency disclosure form is required; to
further clarify when a written brokerage agreement is required
to establish a brokerage relationship; and to provide when a
licensee referral agreement must be in writing.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 34-27-81, 34-27-82, and 34-27-100
Code of Alabama 1975, are amended to read as follows:
"§34-27-81
As used in this article, the following words shall have
the following meanings:
(1) AGENCY AGREEMENT. A written agreement between a
broker and a client which creates a fiduciary relationship
between the broker and a principal, who is commonly referred
to as a clientthe client.
(2) BROKER. Any person licensed as a real estate broker
pursuant to Articles 1 and 2 of this chapter.
(3) BROKERAGE AGREEMENT. A specific written agreement
between a brokerage firmcompany as defined in Section 34-27-2
and a consumer which establishes a brokerage relationship. The
brokerage agreement shall contain a statement of the terms and
conditions of the brokerage services to be provided , including
any compensation to be paid to or through the company. The
term includes agency agreements and transaction brokerage
agreements.
(4) BROKERAGE SERVICE. Any service, except for rental
or property management services, provided by a broker or
licensee to another person and includes all activities for
which a real estate license is required under Articles 1 and 2
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which a real estate license is required under Articles 1 and 2
of this chapter.
(5) CONSUMER. A person who obtains information, advice,
or services concerning real estate from a real estate
licensee.CLIENT. A person who has an agency agreement with a
broker for brokerage services whether he or she is the buyer
or seller.
(6) CLIENT. A person who has an agency agreement with a
broker for brokerage service, whether he or she be buyer or
seller.CONSUMER. A person who obtains information, advice, or
services concerning real estate from a real estate licensee.
(7) CUSTOMER. A person who is provided brokerage
services by a broker or licensee but who is not a client of
the broker.
(8) DUAL AGENCY. An agency relationship in which the
same brokerage firm represents both the seller and the buyer
in the same real estate transaction .once all parties have
signed the consent agreement. Circumstances whichthat
establish a dual agency include, but are not limited to, one
of the following:
a. When two or more licensees licensed under the same
broker each represent a different party to the transaction.
b. When one licensee represents both the buyer and
seller in a real estate transaction.
(9) INFORMED CONSENT. A consumer's agreement to allow
something to happen which is based upon full disclosure of
facts needed to choose appropriate brokerage services.
(10) LICENSEE. Any broker, salesperson, or company as
defined in Section 34-27-2 .
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defined in Section 34-27-2 .
(11) LIMITED CONSENSUAL DUAL AGENT. A licensee who,
with the written informed consent of all parties to a
contemplated real estate transaction, is engaged as an agent
for both the buyer and seller. Circumstances which establish
dual agency include, but are not limited to, one of the
following:
a. When two or more licensees licensed under the same
broker each represent a different party to the transaction.
b. When one licensee represents both the buyer and
seller in a real estate transaction.
(12) MATERIAL FACT. A fact that is of significance to a
reasonable party which affects the party's decision to enter
into a real estate contract.
(13) QUALIFYING BROKER. A broker under whom a
corporation, partnership, branch office, or lawfully
constituted business organization, as the Legislature may from
time to time provide, is licensed, or a broker licensed to do
business as a sole proprietorship who is responsible for
supervising the acts of the company , or proprietorship and all
real estate licensees licensed therewith.
(14) REAL ESTATE TRANSACTION. The purchase, sale, lease
and rental, option, or exchange of an interest in real estate.
(15) SINGLE AGENT. A licensee who is engaged by and
represents only one party in a real estate transaction. A
single agent includes, but is not limited to, one may be only
one of the following:
a. Buyer's agent, which means a broker or licensee who
is engaged by and represents only the buyer in a real estate
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is engaged by and represents only the buyer in a real estate
transaction.
b. Seller's agent, which means a broker or licensee who
is engaged by and represents only the seller in a real estate
transaction.
(16) SUB-AGENT. A licensee who is empowered to act for
another broker in performing real estate brokerage tasks for a
principal, and who owes the same duties to the principal as
the agent of the principal.
(17) TRANSACTION BROKER. A licensee who assists one or
more parties in a contemplated real estate transaction without
being an agent or fiduciary or advocate for the interest of
that party to a transaction."
"§34-27-82
(a) When engaged in any real estate transaction, the
licensee may act as a single agent, sub-agent, a limited
consensual dual agent, or as a transaction broker.
(b) At the initial contact between a licensee and the
consumer and until such time a broker enters into a specific
written agreement to establish an agency relationship with one
or more of the parties to a transaction, the licensee shall
not be considered an agent of that consumer. An agency
relationship shall not be assumed, implied, or created without
a written bilateral agency agreement establishing the terms of
the agency relationship. In the absence of a signed brokerage
agreement between the parties, the transaction brokerage
relationship shall remain in effect.
(c) As soon as reasonably possible and before any
confidential information is disclosed to any other person by a
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confidential information is disclosed to any other person by a
licensee, theThe licensee shall provide a written disclosure
form to a consumer for signature describing the alternative
types of brokerage services, as identified in subsection (a),
that are available to clients and customers of real estate
brokerage companies , as soon as reasonably possible and before
any confidential information is disclosed to any other person
by a licensee. Such disclosure must occur at least prior to a
licensee providing any brokerage service, which includes a
licensee showing a property as to a prospective buyer but does
not include a seller's agent conducting an open house as to
prospective buyers. As part of the disclosure, Thethe licensee
shall also provideinform a consumer as toin writing the
specific types of brokerage services that are provided by his
or her company, as required by Section 34-27-83, which shall
also include general information on how the company and
licensee are compensated for the brokerage services . A broker
shall not be required to offer or engage in any one or in all
of the alternative brokerage arrangementsservices specified in
subsection (a). The licensee will provide a written form to
the consumer for their signature describing the alternative
types of brokerage arrangements available. All rental or
property management services are excluded from the
requirements of this subsection.
(d) A licensee shall not be required to comply with the
provisions of subsection (c) when engaged in transactions with
any corporation, non-profitnonprofit corporation, professional
corporation, professional association, limited liability
company, partnership, any partnership created under the
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company, partnership, any partnership created under the
Uniform Partnership Act ,(commencing at Section 10-8A-101 ),
real estate investment trust, business trust, charitable
trust, family trust, or any governmental entity in
transactions involving real estate.
(e) After disclosure, the consumer may make an
affirmative election of a specific type of brokerage
arrangementservice that is available from the real estate
brokerage company by signing a brokerage agreement . The
brokerage agreement shall contain a statement of the terms and
conditions of the brokerage services that the company will
provide, as provided in Section 34-27-81. The consumer or
customer may not be required to enter into a written brokerage
agreement in order for a licensee to show a property to the
consumer or customer. Notwithstanding the application of
subsection (d), a written brokerage agreement is required
prior to a licensee either listing for sale or submitting an
offer on a property on behalf of a consumer, customer, or
client for compensation. In the absence of a signed brokerage
agreement between the parties, the transaction brokerage
relationship shall remain in effect.
(f) When serving as a transaction broker, the duties of
the licensee to all the parties to a real estate transaction
are limited to those which are enumerated in Section 34-27-84.
A signed brokerage agreement between the parties or, in the
absence of a signed brokerage agreement, the continuation of
the transaction brokerage relationship, shall constitute
informed consent by the consumer as to the services the
consumer shall receive from the broker.
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consumer shall receive from the broker.
(g) Disclosure forms shall be provided to buyers and
sellers. All real estate brokerage firmscompanies operating
within the State of Alabama shall use the same agency
disclosure forms. Disclosure forms describing the alternative
types of brokerage services identified above shall be written
by the Alabama Real Estate Commission.
(h) Nothing in this section shall prohibit the consumer
from entering into a written contract with a broker which
contains provisions for services not specifically identified
in the written disclosure form."
"§34-27-100
For the purposes of this article, the following terms
shall have the following meanings:
(1) ACTUAL INTRODUCTION. a. WhenEither: (i) when the
buyer, seller, landlord, or tenant has been referred to the
real estate licensee by the person or entity seeking the
referral fee prior to the time the customer has executed a
real estate brokerage services disclosure form or waived
execution in writing or the customer has executed a buyer's
agency agreement, property listing agreement, or a transaction
brokerage agreement; or
b. For(ii) for real estate transactions in which the
law of this state does not require the presentation of a real
estate brokerage services disclosure form, when the buyer,
seller, landlord, or tenant has been referred to the real
estate licensee by the person or entity seeking the referral
fee prior to any contact between the buyer, seller, landlord,
or tenant and the real estate licensee during which their real
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or tenant and the real estate licensee during which their real
estate business has been discussed . Any such referral
agreement between real estate licensees must be in writing.
Any attempt to present an unlawful referral agreement is
prohibited.
(2) INTERFERENCE WITH A REAL ESTATE BROKERAGE
RELATIONSHIP. Demanding a referral fee from a real estate
licensee when reasonable cause for payment does not exist. The
term "interference with a real estate brokerage relationship"
may also include a threat by a third party to reduce,
withhold, or eliminate any relocation or other benefits, or
the actual reduction, withholding, or elimination of any
relocation or other benefit, in order to generate a referral
fee from a real estate broker when reasonable cause for
payment does not exist. Notwithstanding the foregoing, either
neither of the following shall not constitute interference
with a real estate brokerage relationship:
a. Communications between an employer or its
representative and an employee concerning relocation policies
and benefits.
b. Advising a party of the right to allow a brokerage
relationship to expire pursuant to its own terms or not to
renew the brokerage relationship upon expiration.
(3) REAL ESTATE BROKERAGE RELATIONSHIP. A relationship
entered into between a real estate broker or salesperson and a
buyer, seller, landlord, or tenant under which the real estate
broker or salesperson engages in any of the acts set forth in
Alabama real estate license law, but the relationship does not
exist prior to actual introduction of the relationship as
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exist prior to actual introduction of the relationship as
provided in subdivision (1).
(4) REASONABLE CAUSE FOR PAYMENT. When an actual
introduction of business has been made, a subagency
relationship between brokers exists, a contractual referral
fee relationship or other agreement exists, or a contractual
cooperative brokerage relationship exists.
(5) REFERRAL FEE. Any fee or commission paid by a real
estate licensee to any person or entity, other than a
cooperative commission offered by a listing real estate broker
to a selling real estate broker or by a selling real estate
broker to a listing real estate broker."
Section 2. This act shall become effective 30 days
after the enactment of this bill.
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