The Alabama Real Estate Commission (AREC) hosted a few meetings in March, including its regular monthly commission meeting. As usual, this month’s Commission meeting began with Director’s remarks. New licensee growth has continued at a rate of 8.83 new applications a day. The Commission performed 5 education and 15 company audits in February. Read on to learn more. 

The Commission held Briefly Legal this month. The topic was money, and AREC’s General Counsel noted a variety of laws related to earnest money and commissions. Notably, AREC discussed Alabama Code § 34-27-84(a)(2), which requires licensees “to exercise reasonable skill and care in providing brokerage services to all parties.” The Commission applies this rule to situations when a licensee is working with a buyer (whether as a buyer’s agent or transaction broker) and the buyer fails to deliver earnest money as required by the purchase agreement. According to the Commission, if the buyer fails to deliver earnest money as required by the purchase agreement, the agent working with the buyer is required to notify the seller/ seller’s agent of this failure. This notification should occur as soon as the buyer’s agent or transaction broker becomes aware that the buyer has not fulfilled the contract’s terms. 

The first formal complaint that the Commission heard this month involved an allegation that a brokerage was allowing a non-licensed person to sell properties. Charges were brought against the several qualifying brokers at the brokerage in the last few years, the brokerage itself, and the unlicensed person accused of doing the selling. At the hearing, the Commission presented evidence that the unlicensed person signed purchase agreements and other legal documents as a salesperson of the owner (a homebuilder). In response, the respondents presented evidence that the unlicensed person was a corporate officer who was given authority to sell the properties on behalf of the company. Alabama license law allows an owner of property to sell his or her own property without having to hold a real estate license. In the case of a corporate or partnership owner of a property, Alabama license law defines the owner as “a partner or corporate officer, who has actual authority to and does make management decisions affecting the overall policy of the corporation or partnership.” Alabama Code § 790-X-1.03(2). The respondents also argued that AREC exceeded the rulemaking authority granted to it by the Alabama Legislature in enacting Alabama Code § 790-X-1.03(2), and that corporations should be free to define which owners may sell business property on behalf of the business. Ultimately, the Commission found the unlicensed person not guilty. However, the Commission found the brokerage and qualifying brokers guilty and assessed each several fines. 

The Commission also heard a formal complaint against a licensee and her business that was initiated by an audit. In that case, the brokerage in question had a rental income account for the property management side of the business. At the time of the audit, the rental income account was short approximately $2000 (although the shortage was rectified before it was time to make a disbursement to the property owner from the account). The licensee and her business were both found in violation and a fine was issued against both. The Commission noted that it is available to set up an assistance visit for any licensee who would like guidance in setting up files, bank accounts, and the like. 

The next AREC meeting will be held on April 25, 2024 at 9 am at Baldwin REALTORS® - 23280 County Road 65, Robertsdale AL 36567.