HB397INTRODUCED
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HB397
TZAE599-1
By Representative Sellers
RFD: Boards, Agencies and Commissions
First Read: 05-Mar-25
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5 TZAE599-1 01/10/25 TRP (L)bm 2024-3170
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First Read: 05-Mar-25
SYNOPSIS:
Under existing law the Alabama Real Estate
Commission may investigate formal complaints made
against a licensee, revoke or suspend his or her
license, impose a fine, or reprimand the licensee if he
or she is found guilty of a disciplinary infraction.
This bill would authorize the commission to take
disciplinary action against a licensee for selling,
offering to sell, assigning, or offering to assign an
equitable interest in a contract to purchase
residential real estate and not disclosing to a
potential buyer that the seller is not the deed holder.
This bill would further provide for disciplinary
actions against a licensee for failure to disclose in
writing to a seller, the buyer's intent to assign an
equitable interest in the seller's property prior to
the assignment, to provide prior notice of at least
three business days of the effective date of the
assignment, and to set a closing date with no automatic
extension.
This bill would further provide for additional
definitions.
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A BILL
TO BE ENTITLED
AN ACT
Relating to the Real Estate Commission; to amend
Sections 34-27-2 and 34-27-36, Code of Alabama 1975; to
provide for definitions; and to provide for additional
disciplinary causes of actions for the non disclosure of
information regarding an equitable interest in a contract or
agreement to purchase certain property.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 34-27-2 and 34-27-36 Code of Alabama
1975, are amended to read as follows:
"§34-27-2
(a) For purposes of Articles 1 and 2 of this chapter,
the following terms shall have the respective meanings
ascribed by this section:
(1) ASSOCIATE BROKER. Any broker other than a
qualifying broker.
(2) BROKER. Any personindividual licensed as a real
estate broker under Articles 1 and 2 of this chapter. The term
also includes associate broker and qualifying broker.
(3) COMMISSION. The Alabama Real Estate Commission,
except where the context requires that it means the fee paid
to a broker or salesperson.
(4) COMMISSIONER. A member of the commission.
(5) COMPANY. Any sole proprietorship, corporation,
partnership, branch office, or lawfully constituted business
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partnership, branch office, or lawfully constituted business
organization as the Legislature may provide for from time to
time, which is licensed as a company under Articles 1 and 2 of
this chapter.
(6) ENGAGE. Contractual relationships between a
qualifying broker and an associate broker or salesperson
licensed under him or her whether the relationship is
employer-employee, independent contractor, or otherwise.
(7) EQUITABLE INTEREST. Any interest or right that a
buyer acquires under a contract or agreement for the purchase
of residential real estate, even though legal title has not
been transferred.
(7)(8) INACTIVE LICENSE. A license which is being held
by the commission office by law, order of the commission, at
the request of the licensee, or which is renewable but is not
currently valid because of failure to renew.
(8)(9) LICENSEE. Any broker, salesperson, or company.
(9)(10) LICENSE PERIOD. That period of time beginning
on October 1 of a year designated by the commission to be the
first year of a license period and ending on midnight
September 30 of the year designated by the commission as the
final year of that license period.
(11) LISTING AGREEMENT. An agreement between a company
and an owner wherein the company agrees to assist the owner in
the sale of the owner's real property in exchange for a fee.
The definition includes agreements authorizing the company to
list or market the owner's real property upon the owner's
future decision to sell the property.
(12) OWNER. A person or entity to whom a grantor has
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(12) OWNER. A person or entity to whom a grantor has
conveyed real property through a valid deed.
(10)(13) PERSON. A natural person.
(11)(14) PLACE OF BUSINESS.
a. A licensed broker living in a rural area of this
state who operates from his or her home, provided that he or
she sets up and maintains an office for the conduct of the
real estate business, which shall not be used for living
purposes or occupancy other than the conduct of the real
estate business. The office shall be used by the broker only
and not as a place of business from which any additional
licensee operates under his or her license. The office shall
have a separate business telephone, separate entrance, and be
properly identified as a real estate office.
b. All licensees located within the city limits or
police jurisdiction of a municipality shall operate from a
separate office located in the city limits or police
jurisdiction. The office shall have a business telephone, meet
all other regulations of the Real Estate Commission, and be
properly identified as a real estate office. Hardship cases
may be subject to waiver of this regulation upon application
and approval by the commission.
c. All business records and files shall be kept at the
place of business as required by law or Real Estate Commission
rules.
(12)(15) QUALIFYING BROKER. A broker under whom a sole
proprietorship, corporation, partnership, branch office, or
lawfully constituted business organization as the Legislature
may from time to time provide is licensed, or a broker
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may from time to time provide is licensed, or a broker
licensed as a company 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.
(13)(16) RECOVERY FUND. The Alabama Real Estate
Recovery Fund.
(17)RESIDENTIAL REAL ESTATE. Real property located in
the state used as a single-family residence.
(14)(18) SALESPERSON. Any person licensed as a real
estate salesperson under Articles 1 and 2 of this chapter.
(b) The licensing requirements of Articles 1 and 2 of
this chapter shall not apply to any of the following persons
and transactions:
(1) Any owner in the managing of, or in consummating a
real estate transaction involving, his or her own real estate
or the real estate of his or her spouse or child or parent.
(2) An attorney-at-law performing his or her duties as
an attorney-at-law.
(3) Persons acting without compensation and in good
faith under a duly executed power of attorney authorizing the
consummation of a real estate transaction.
(4) Persons or a state or federally chartered financial
institution acting as a receiver, trustee, administrator,
executor, or guardian; or acting under a court order or under
authority of a trust instrument or will.
(5) Public officers performing their official duties.
(6) Persons performing general clerical or
administrative duties for a broker so long as the person does
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administrative duties for a broker so long as the person does
not physically show listed property.
(7) Persons acting as the manager for an apartment
building or complex. However, this exception shall not apply
to a person acting as an on-site manager of a condominium
building or complex.
(8) Persons licensed as time-share sellers under
Article 3 of this chapter performing an act consistent with
that article.
(9) Transactions involving the sale, lease, or transfer
of cemetery lots."
"§34-27-36
(a) The commission 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 commission may
issue subpoenas and compel the testimony of witnesses and the
production of records and documents during an investigation.
If probable cause is found, a formal complaint shall be filed
and the commission shall hold a hearing on the formal
complaint. The commission shall revoke or suspend the license
or impose a fine of not less than one hundred dollars ($100)
nor more than two thousand five hundred dollars ($2,500), or
both, or reprimand the licensee in each instance in which the
licensee is found guilty of any of the following acts set out
in this section. The commission may revoke or suspend a
license until such time as the licensee has completed an
approved continuing education course and/or made restitution
to accounts containing funds to be held for other parties. The
commission also may also stay the revocation or suspension of
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commission also may also stay the revocation or suspension of
a license and require completion of an approved education
course and/or the making of restitution to accounts containing
funds to be held for other parties.
(1) Procuring or attempting to procure, a license, for
himself or herself or another, by fraud, misrepresentation, or
deceit, or by making a material misstatement of fact in an
application for a license.
(2) Engaging in misrepresentation or dishonest or
fraudulent acts when selling, buying, trading, or renting real
property of his or her own or of a spouse or child or parent.
(3) Making a material misrepresentation, or failing to
disclose to a potential purchaser or lessee any latent
structural defect or any other defect known to the licensee.
Latent structural defects and other defects do not refer to
trivial or insignificant defects but refer to those defects
that would be a significant factor to a reasonable and prudent
person in making a decision to purchase or lease.
(4) Making any false promises of a character likely to
influence, persuade, or induce any person to enter into any
contract or agreement.
(5) Pursuing a continued and flagrant course of
misrepresentation or the making of false promises through
agents or salespersons or any medium of advertising or
otherwise.
(6) Publishing or causing to be published any
advertisement which deceives or which is likely to deceive the
public, or which in any manner tends to create a misleading
impression or which fails to identify the person causing the
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impression or which fails to identify the person causing the
advertisement to be placed as a licensed broker or
salesperson.
(7) Acting for more than one party in a transaction
without the knowledge and consent in writing of all parties
for whom he or she acts.
(8)a. Failing, within a reasonable time, to properly
account for or remit money coming into his or her possession
which belongs to others, or commingling money belonging to
others with his or her own funds.
b. Failing to deposit and account for at all times all
funds belonging to, or being held for others, in a separate
federally insured account or accounts in a financial
institution located in Alabama.
c. Failing to keep for at least three years a complete
record of funds belonging to others showing to whom the money
belongs, date deposited, date of withdrawal, and other
pertinent information.
(9) Placing a sign on any property offering it for
sale, lease, or rent without the consent of the owner.
(10) Failing to voluntarily furnish a copy of each
listing, contract, lease, and other document to each party
executing the document with reasonable promptness.
(11) Paying any profit, compensation, commission, or
fee to, or dividing any profit, compensation, commission, or
fee with, anyone other than a licensee or multiple listing
service. This subdivision shall not prevent an associate
broker or salesperson from owning any lawfully constituted
business organization, including, but not limited to, a
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business organization, including, but not limited to, a
corporation or limited liability company or limited liability
corporation, for the purpose of receiving payments
contemplated in this subsection. The business organization
shall not be required to be licensed under this chapter, and
shall not engage in any other activity requiring a real estate
license.
(12) Paying or receiving any rebate from any person in
a real estate transaction.
(13) Inducing any party to a contract to break the
contract for the purpose of substituting a new contract, where
the substitution is motivated by the personal gain of the
licensee.
(14) If the licensee is a salesperson or associate
broker, accepting a commission or other valuable consideration
for performing any act for which a license is required from
any person except his or her qualifying broker.
(15) If a qualifying broker or company, allowing a
salesperson or associate broker licensed under him or her to
advertise himself or herself as a real estate agent without
the name or trade name of the qualifying broker or company
appearing prominently on the advertising; or if the licensee
is a salesperson or associate broker, advertising himself or
herself as a real estate agent without the name or trade name
of the qualifying broker or company under whom the salesperson
or associate broker is licensed appearing prominently on the
advertising.
(16) Presenting to the commission, as payment for a fee
or fine, a check that is returned unpaid.
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or fine, a check that is returned unpaid.
(17) Establishing an association, by employment or
otherwise, with an unlicensed person who is expected or
required to act as a licensee, or aiding, abetting, or
conspiring with a person to circumvent the requirements of
this chapter.
(18) Failing to disclose to an owner the licensee's
intention to acquire, directly or indirectly, an interest in
property which he or she or his or her associates have been
employed to sell.
(19) Violating or disregarding any provision of this
chapter or any rule, regulation, or order of the commission.
(20) If a broker, accepting Accepting a "net listing"
agreement for sale of real property or any interest therein. A
"net listing" is one that stipulates a net price to be
received by the owner with the excess due to be received by
the broker as his or her commission and the licensee is not a
buyer, seller, or assigned buyer of the subject property .
(21) Misrepresenting or failing to disclose to any
lender, guaranteeing agency, or any other interested party,
the true terms of a sale of real estate.
(22) Failing to inform the buyer or seller at the time
an offer is presented that he or she will be expected to pay
certain closing costs and the approximate amount of those
costs.
(23)a. Having entered a plea of guilty or nolo
contendere to, or having been found guilty of or convicted of
a felony or a crime involving moral turpitude.
b. Having a final money judgment rendered against him
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b. Having a final money judgment rendered against him
or her which results from an act or omission occurring in the
pursuit of his or her real estate business or involves the
goodwill of an existing real estate business.
(24) Offering free lots or conducting lotteries for the
purpose of influencing a party to purchase or lease real
estate.
(25) Failing to include a fixed date of expiration in a
written listing agreement or failing to leave a copy of the
agreement with the principal.
(26) Conduct which constitutes or demonstrates
dishonest dealings, bad faith, or untrustworthiness.
(27) Acting negligently or incompetently in performing
an act for which a person is required to hold a real estate
license.
(28) Failing or refusing on demand to produce a
document, book, or record in his or her possession concerning
a real estate transaction conducted by him or her for
inspection by the commission or its authorized personnel or
representative.
(29) Failing within a reasonable time to provide
information requested by the commission during an
investigation or after a formal complaint has been filed.
(30) Failing without cause to surrender to the rightful
owner, on demand, a document or instrument coming into his or
her possession.
(31) If a qualifying broker or company, failing to keep
in their files copies of all contracts, leases, listings, and
other records pertinent to real estate transactions for a
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other records pertinent to real estate transactions for a
period of three years.
(32) When selling, offering to sell, assigning, or
offering to assign an equitable interest in a contract to
purchase residential real estate:
a. Failing to disclose in writing to a potential buyer
that the holder of an equitable interest is not the deed
holder of the property and is only offering to sell or assign
his or her equitable interest; or
b. Failing to disclose in writing to a seller both of
the following:
1. The intent to assign an equitable interest in the
seller's real estate prior to offering to assign the interest.
2. The effective date of an assignment of the buyer's
equitable interest to a subsequent purchaser of the property
at least three business days prior to the effective date of
the assignment.
c. Failing to include a fixed date of closing with no
automatic extension in the contract that establishes the
equitable interest.
(b) If it appears that a person, firm, corporation, or
any business entity has engaged, or is about to engage, in an
act or practice constituting a violation of Article 1 or 2 of
this chapter or any rule or order of the commission, the
commission, through the Attorney General, may institute legal
actions to enjoin the act or practice and to enforce
compliance with Articles 1 and 2 of this chapter or any rule
or order of the commission. To prevail in an action, it shall
not be necessary to allege or prove either that an adequate
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not be necessary to allege or prove either that an adequate
remedy at law does not exist or that substantial or
irreparable damage would result from the continued violation.
(c)(1) Notwithstanding any other provisions of law, the
commission may issue an order requiring any accused person,
firm, corporation, or business entity to cease and desist from
engaging in activities requiring a license under this chapter
when the accused person, firm, corporation, or business entity
is not licensed under this chapter. The order shall be entered
by the executive director after a finding of probable cause by
the commission staff. The order shall become final 15 days
after its service upon the accused, unless the accused
requests a hearing before the commission. Upon hearing the
case and finding violations, the commission may make the cease
and desist order final and the commission may impose a fine
for each violation in an amount consistent with the range of
fines applicable to licensees, and in addition, may impose a
fine in the amount of any gain or economic benefit that was
derived from the violation, and in addition, may impose a fine
in the amount of the commission's costs incurred. Any fines
not paid as ordered shall be enforceable in any court with
competent jurisdiction and proper venue.
(2) Notwithstanding any other provisions of law, the
commission may decline to issue an order requiring any accused
person, firm, corporation, or business entity to cease and
desist from engaging in activities requiring a license under
this chapter when the accused person, firm, corporation, or
business entity is not licensed under this chapter. In this
instance, the commission shall proceed to give appropriate
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instance, the commission shall proceed to give appropriate
notice of the violations and hold a hearing thereon. Upon
hearing the case and finding violations, the commission may
impose a fine for each violation in an amount consistent with
the range of fines applicable to licensees, and in addition,
may impose a fine in the amount of any gain or economic
benefit that was derived from the violation, and in addition,
may impose a fine in the amount of the commission's costs
incurred. Any fine or fines not paid as ordered shall be
enforceable in any court with competent jurisdiction and
proper venue.
(d) The commission shall notify the licensee and
qualifying broker in writing regarding the complaint.
(e) The commission shall notify the complainant,
licensee, and qualifying broker in writing regarding the
disposition of the complaint."
Section 2. This act shall become effective on October
1, 2025.
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