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Alabama House Bill HB397

Alabama 2025 Regular Session

Alabama House Bill HB397 Compare Versions

Only one version of the bill is available at this time.
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11 HB397INTRODUCED
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33 HB397
44 TZAE599-1
55 By Representative Sellers
66 RFD: Boards, Agencies and Commissions
77 First Read: 05-Mar-25
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1212 5 TZAE599-1 01/10/25 TRP (L)bm 2024-3170
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1414 First Read: 05-Mar-25
1515 SYNOPSIS:
1616 Under existing law the Alabama Real Estate
1717 Commission may investigate formal complaints made
1818 against a licensee, revoke or suspend his or her
1919 license, impose a fine, or reprimand the licensee if he
2020 or she is found guilty of a disciplinary infraction.
2121 This bill would authorize the commission to take
2222 disciplinary action against a licensee for selling,
2323 offering to sell, assigning, or offering to assign an
2424 equitable interest in a contract to purchase
2525 residential real estate and not disclosing to a
2626 potential buyer that the seller is not the deed holder.
2727 This bill would further provide for disciplinary
2828 actions against a licensee for failure to disclose in
2929 writing to a seller, the buyer's intent to assign an
3030 equitable interest in the seller's property prior to
3131 the assignment, to provide prior notice of at least
3232 three business days of the effective date of the
3333 assignment, and to set a closing date with no automatic
3434 extension.
3535 This bill would further provide for additional
3636 definitions.
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6666 A BILL
6767 TO BE ENTITLED
6868 AN ACT
6969 Relating to the Real Estate Commission; to amend
7070 Sections 34-27-2 and 34-27-36, Code of Alabama 1975; to
7171 provide for definitions; and to provide for additional
7272 disciplinary causes of actions for the non disclosure of
7373 information regarding an equitable interest in a contract or
7474 agreement to purchase certain property.
7575 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
7676 Section 1. Section 34-27-2 and 34-27-36 Code of Alabama
7777 1975, are amended to read as follows:
7878 "ยง34-27-2
7979 (a) For purposes of Articles 1 and 2 of this chapter,
8080 the following terms shall have the respective meanings
8181 ascribed by this section:
8282 (1) ASSOCIATE BROKER. Any broker other than a
8383 qualifying broker.
8484 (2) BROKER. Any personindividual licensed as a real
8585 estate broker under Articles 1 and 2 of this chapter. The term
8686 also includes associate broker and qualifying broker.
8787 (3) COMMISSION. The Alabama Real Estate Commission,
8888 except where the context requires that it means the fee paid
8989 to a broker or salesperson.
9090 (4) COMMISSIONER. A member of the commission.
9191 (5) COMPANY. Any sole proprietorship, corporation,
9292 partnership, branch office, or lawfully constituted business
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122122 partnership, branch office, or lawfully constituted business
123123 organization as the Legislature may provide for from time to
124124 time, which is licensed as a company under Articles 1 and 2 of
125125 this chapter.
126126 (6) ENGAGE. Contractual relationships between a
127127 qualifying broker and an associate broker or salesperson
128128 licensed under him or her whether the relationship is
129129 employer-employee, independent contractor, or otherwise.
130130 (7) EQUITABLE INTEREST. Any interest or right that a
131131 buyer acquires under a contract or agreement for the purchase
132132 of residential real estate, even though legal title has not
133133 been transferred.
134134 (7)(8) INACTIVE LICENSE. A license which is being held
135135 by the commission office by law, order of the commission, at
136136 the request of the licensee, or which is renewable but is not
137137 currently valid because of failure to renew.
138138 (8)(9) LICENSEE. Any broker, salesperson, or company.
139139 (9)(10) LICENSE PERIOD. That period of time beginning
140140 on October 1 of a year designated by the commission to be the
141141 first year of a license period and ending on midnight
142142 September 30 of the year designated by the commission as the
143143 final year of that license period.
144144 (11) LISTING AGREEMENT. An agreement between a company
145145 and an owner wherein the company agrees to assist the owner in
146146 the sale of the owner's real property in exchange for a fee.
147147 The definition includes agreements authorizing the company to
148148 list or market the owner's real property upon the owner's
149149 future decision to sell the property.
150150 (12) OWNER. A person or entity to whom a grantor has
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180180 (12) OWNER. A person or entity to whom a grantor has
181181 conveyed real property through a valid deed.
182182 (10)(13) PERSON. A natural person.
183183 (11)(14) PLACE OF BUSINESS.
184184 a. A licensed broker living in a rural area of this
185185 state who operates from his or her home, provided that he or
186186 she sets up and maintains an office for the conduct of the
187187 real estate business, which shall not be used for living
188188 purposes or occupancy other than the conduct of the real
189189 estate business. The office shall be used by the broker only
190190 and not as a place of business from which any additional
191191 licensee operates under his or her license. The office shall
192192 have a separate business telephone, separate entrance, and be
193193 properly identified as a real estate office.
194194 b. All licensees located within the city limits or
195195 police jurisdiction of a municipality shall operate from a
196196 separate office located in the city limits or police
197197 jurisdiction. The office shall have a business telephone, meet
198198 all other regulations of the Real Estate Commission, and be
199199 properly identified as a real estate office. Hardship cases
200200 may be subject to waiver of this regulation upon application
201201 and approval by the commission.
202202 c. All business records and files shall be kept at the
203203 place of business as required by law or Real Estate Commission
204204 rules.
205205 (12)(15) QUALIFYING BROKER. A broker under whom a sole
206206 proprietorship, corporation, partnership, branch office, or
207207 lawfully constituted business organization as the Legislature
208208 may from time to time provide is licensed, or a broker
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238238 may from time to time provide is licensed, or a broker
239239 licensed as a company to do business as a sole proprietorship
240240 who is responsible for supervising the acts of the company or
241241 proprietorship and all real estate licensees licensed
242242 therewith.
243243 (13)(16) RECOVERY FUND. The Alabama Real Estate
244244 Recovery Fund.
245245 (17)RESIDENTIAL REAL ESTATE. Real property located in
246246 the state used as a single-family residence.
247247 (14)(18) SALESPERSON. Any person licensed as a real
248248 estate salesperson under Articles 1 and 2 of this chapter.
249249 (b) The licensing requirements of Articles 1 and 2 of
250250 this chapter shall not apply to any of the following persons
251251 and transactions:
252252 (1) Any owner in the managing of, or in consummating a
253253 real estate transaction involving, his or her own real estate
254254 or the real estate of his or her spouse or child or parent.
255255 (2) An attorney-at-law performing his or her duties as
256256 an attorney-at-law.
257257 (3) Persons acting without compensation and in good
258258 faith under a duly executed power of attorney authorizing the
259259 consummation of a real estate transaction.
260260 (4) Persons or a state or federally chartered financial
261261 institution acting as a receiver, trustee, administrator,
262262 executor, or guardian; or acting under a court order or under
263263 authority of a trust instrument or will.
264264 (5) Public officers performing their official duties.
265265 (6) Persons performing general clerical or
266266 administrative duties for a broker so long as the person does
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296296 administrative duties for a broker so long as the person does
297297 not physically show listed property.
298298 (7) Persons acting as the manager for an apartment
299299 building or complex. However, this exception shall not apply
300300 to a person acting as an on-site manager of a condominium
301301 building or complex.
302302 (8) Persons licensed as time-share sellers under
303303 Article 3 of this chapter performing an act consistent with
304304 that article.
305305 (9) Transactions involving the sale, lease, or transfer
306306 of cemetery lots."
307307 "ยง34-27-36
308308 (a) The commission or its staff may on its own, or on
309309 the verified complaint in writing of any person, investigate
310310 the actions and records of a licensee. The commission may
311311 issue subpoenas and compel the testimony of witnesses and the
312312 production of records and documents during an investigation.
313313 If probable cause is found, a formal complaint shall be filed
314314 and the commission shall hold a hearing on the formal
315315 complaint. The commission shall revoke or suspend the license
316316 or impose a fine of not less than one hundred dollars ($100)
317317 nor more than two thousand five hundred dollars ($2,500), or
318318 both, or reprimand the licensee in each instance in which the
319319 licensee is found guilty of any of the following acts set out
320320 in this section. The commission may revoke or suspend a
321321 license until such time as the licensee has completed an
322322 approved continuing education course and/or made restitution
323323 to accounts containing funds to be held for other parties. The
324324 commission also may also stay the revocation or suspension of
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354354 commission also may also stay the revocation or suspension of
355355 a license and require completion of an approved education
356356 course and/or the making of restitution to accounts containing
357357 funds to be held for other parties.
358358 (1) Procuring or attempting to procure, a license, for
359359 himself or herself or another, by fraud, misrepresentation, or
360360 deceit, or by making a material misstatement of fact in an
361361 application for a license.
362362 (2) Engaging in misrepresentation or dishonest or
363363 fraudulent acts when selling, buying, trading, or renting real
364364 property of his or her own or of a spouse or child or parent.
365365 (3) Making a material misrepresentation, or failing to
366366 disclose to a potential purchaser or lessee any latent
367367 structural defect or any other defect known to the licensee.
368368 Latent structural defects and other defects do not refer to
369369 trivial or insignificant defects but refer to those defects
370370 that would be a significant factor to a reasonable and prudent
371371 person in making a decision to purchase or lease.
372372 (4) Making any false promises of a character likely to
373373 influence, persuade, or induce any person to enter into any
374374 contract or agreement.
375375 (5) Pursuing a continued and flagrant course of
376376 misrepresentation or the making of false promises through
377377 agents or salespersons or any medium of advertising or
378378 otherwise.
379379 (6) Publishing or causing to be published any
380380 advertisement which deceives or which is likely to deceive the
381381 public, or which in any manner tends to create a misleading
382382 impression or which fails to identify the person causing the
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412412 impression or which fails to identify the person causing the
413413 advertisement to be placed as a licensed broker or
414414 salesperson.
415415 (7) Acting for more than one party in a transaction
416416 without the knowledge and consent in writing of all parties
417417 for whom he or she acts.
418418 (8)a. Failing, within a reasonable time, to properly
419419 account for or remit money coming into his or her possession
420420 which belongs to others, or commingling money belonging to
421421 others with his or her own funds.
422422 b. Failing to deposit and account for at all times all
423423 funds belonging to, or being held for others, in a separate
424424 federally insured account or accounts in a financial
425425 institution located in Alabama.
426426 c. Failing to keep for at least three years a complete
427427 record of funds belonging to others showing to whom the money
428428 belongs, date deposited, date of withdrawal, and other
429429 pertinent information.
430430 (9) Placing a sign on any property offering it for
431431 sale, lease, or rent without the consent of the owner.
432432 (10) Failing to voluntarily furnish a copy of each
433433 listing, contract, lease, and other document to each party
434434 executing the document with reasonable promptness.
435435 (11) Paying any profit, compensation, commission, or
436436 fee to, or dividing any profit, compensation, commission, or
437437 fee with, anyone other than a licensee or multiple listing
438438 service. This subdivision shall not prevent an associate
439439 broker or salesperson from owning any lawfully constituted
440440 business organization, including, but not limited to, a
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470470 business organization, including, but not limited to, a
471471 corporation or limited liability company or limited liability
472472 corporation, for the purpose of receiving payments
473473 contemplated in this subsection. The business organization
474474 shall not be required to be licensed under this chapter, and
475475 shall not engage in any other activity requiring a real estate
476476 license.
477477 (12) Paying or receiving any rebate from any person in
478478 a real estate transaction.
479479 (13) Inducing any party to a contract to break the
480480 contract for the purpose of substituting a new contract, where
481481 the substitution is motivated by the personal gain of the
482482 licensee.
483483 (14) If the licensee is a salesperson or associate
484484 broker, accepting a commission or other valuable consideration
485485 for performing any act for which a license is required from
486486 any person except his or her qualifying broker.
487487 (15) If a qualifying broker or company, allowing a
488488 salesperson or associate broker licensed under him or her to
489489 advertise himself or herself as a real estate agent without
490490 the name or trade name of the qualifying broker or company
491491 appearing prominently on the advertising; or if the licensee
492492 is a salesperson or associate broker, advertising himself or
493493 herself as a real estate agent without the name or trade name
494494 of the qualifying broker or company under whom the salesperson
495495 or associate broker is licensed appearing prominently on the
496496 advertising.
497497 (16) Presenting to the commission, as payment for a fee
498498 or fine, a check that is returned unpaid.
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528528 or fine, a check that is returned unpaid.
529529 (17) Establishing an association, by employment or
530530 otherwise, with an unlicensed person who is expected or
531531 required to act as a licensee, or aiding, abetting, or
532532 conspiring with a person to circumvent the requirements of
533533 this chapter.
534534 (18) Failing to disclose to an owner the licensee's
535535 intention to acquire, directly or indirectly, an interest in
536536 property which he or she or his or her associates have been
537537 employed to sell.
538538 (19) Violating or disregarding any provision of this
539539 chapter or any rule, regulation, or order of the commission.
540540 (20) If a broker, accepting Accepting a "net listing"
541541 agreement for sale of real property or any interest therein. A
542542 "net listing" is one that stipulates a net price to be
543543 received by the owner with the excess due to be received by
544544 the broker as his or her commission and the licensee is not a
545545 buyer, seller, or assigned buyer of the subject property .
546546 (21) Misrepresenting or failing to disclose to any
547547 lender, guaranteeing agency, or any other interested party,
548548 the true terms of a sale of real estate.
549549 (22) Failing to inform the buyer or seller at the time
550550 an offer is presented that he or she will be expected to pay
551551 certain closing costs and the approximate amount of those
552552 costs.
553553 (23)a. Having entered a plea of guilty or nolo
554554 contendere to, or having been found guilty of or convicted of
555555 a felony or a crime involving moral turpitude.
556556 b. Having a final money judgment rendered against him
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586586 b. Having a final money judgment rendered against him
587587 or her which results from an act or omission occurring in the
588588 pursuit of his or her real estate business or involves the
589589 goodwill of an existing real estate business.
590590 (24) Offering free lots or conducting lotteries for the
591591 purpose of influencing a party to purchase or lease real
592592 estate.
593593 (25) Failing to include a fixed date of expiration in a
594594 written listing agreement or failing to leave a copy of the
595595 agreement with the principal.
596596 (26) Conduct which constitutes or demonstrates
597597 dishonest dealings, bad faith, or untrustworthiness.
598598 (27) Acting negligently or incompetently in performing
599599 an act for which a person is required to hold a real estate
600600 license.
601601 (28) Failing or refusing on demand to produce a
602602 document, book, or record in his or her possession concerning
603603 a real estate transaction conducted by him or her for
604604 inspection by the commission or its authorized personnel or
605605 representative.
606606 (29) Failing within a reasonable time to provide
607607 information requested by the commission during an
608608 investigation or after a formal complaint has been filed.
609609 (30) Failing without cause to surrender to the rightful
610610 owner, on demand, a document or instrument coming into his or
611611 her possession.
612612 (31) If a qualifying broker or company, failing to keep
613613 in their files copies of all contracts, leases, listings, and
614614 other records pertinent to real estate transactions for a
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644644 other records pertinent to real estate transactions for a
645645 period of three years.
646646 (32) When selling, offering to sell, assigning, or
647647 offering to assign an equitable interest in a contract to
648648 purchase residential real estate:
649649 a. Failing to disclose in writing to a potential buyer
650650 that the holder of an equitable interest is not the deed
651651 holder of the property and is only offering to sell or assign
652652 his or her equitable interest; or
653653 b. Failing to disclose in writing to a seller both of
654654 the following:
655655 1. The intent to assign an equitable interest in the
656656 seller's real estate prior to offering to assign the interest.
657657 2. The effective date of an assignment of the buyer's
658658 equitable interest to a subsequent purchaser of the property
659659 at least three business days prior to the effective date of
660660 the assignment.
661661 c. Failing to include a fixed date of closing with no
662662 automatic extension in the contract that establishes the
663663 equitable interest.
664664 (b) If it appears that a person, firm, corporation, or
665665 any business entity has engaged, or is about to engage, in an
666666 act or practice constituting a violation of Article 1 or 2 of
667667 this chapter or any rule or order of the commission, the
668668 commission, through the Attorney General, may institute legal
669669 actions to enjoin the act or practice and to enforce
670670 compliance with Articles 1 and 2 of this chapter or any rule
671671 or order of the commission. To prevail in an action, it shall
672672 not be necessary to allege or prove either that an adequate
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702702 not be necessary to allege or prove either that an adequate
703703 remedy at law does not exist or that substantial or
704704 irreparable damage would result from the continued violation.
705705 (c)(1) Notwithstanding any other provisions of law, the
706706 commission may issue an order requiring any accused person,
707707 firm, corporation, or business entity to cease and desist from
708708 engaging in activities requiring a license under this chapter
709709 when the accused person, firm, corporation, or business entity
710710 is not licensed under this chapter. The order shall be entered
711711 by the executive director after a finding of probable cause by
712712 the commission staff. The order shall become final 15 days
713713 after its service upon the accused, unless the accused
714714 requests a hearing before the commission. Upon hearing the
715715 case and finding violations, the commission may make the cease
716716 and desist order final and the commission may impose a fine
717717 for each violation in an amount consistent with the range of
718718 fines applicable to licensees, and in addition, may impose a
719719 fine in the amount of any gain or economic benefit that was
720720 derived from the violation, and in addition, may impose a fine
721721 in the amount of the commission's costs incurred. Any fines
722722 not paid as ordered shall be enforceable in any court with
723723 competent jurisdiction and proper venue.
724724 (2) Notwithstanding any other provisions of law, the
725725 commission may decline to issue an order requiring any accused
726726 person, firm, corporation, or business entity to cease and
727727 desist from engaging in activities requiring a license under
728728 this chapter when the accused person, firm, corporation, or
729729 business entity is not licensed under this chapter. In this
730730 instance, the commission shall proceed to give appropriate
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760760 instance, the commission shall proceed to give appropriate
761761 notice of the violations and hold a hearing thereon. Upon
762762 hearing the case and finding violations, the commission may
763763 impose a fine for each violation in an amount consistent with
764764 the range of fines applicable to licensees, and in addition,
765765 may impose a fine in the amount of any gain or economic
766766 benefit that was derived from the violation, and in addition,
767767 may impose a fine in the amount of the commission's costs
768768 incurred. Any fine or fines not paid as ordered shall be
769769 enforceable in any court with competent jurisdiction and
770770 proper venue.
771771 (d) The commission shall notify the licensee and
772772 qualifying broker in writing regarding the complaint.
773773 (e) The commission shall notify the complainant,
774774 licensee, and qualifying broker in writing regarding the
775775 disposition of the complaint."
776776 Section 2. This act shall become effective on October
777777 1, 2025.
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