Sen. Garlan Gudger (R-Cullman), the nominee of the upper chamber’s Republican Caucus, was unanimously elected as Senate President Pro Tem, a position that gives him great influence over the actions in the Senate and the bills and measures that will be considered by its members. Upon his election, Gudger used his appointment authority to select Sen. Lance Bell (R-Pell City) as chair of the Senate Fiscal Responsibility and Economic Development (FRED) Committee. Gudger previously chaired the committee and vacated the seat with his promotion.

From a legislation standpoint, Gov. Kay Ivey submitted her spending recommendations for Alabama’s two budgets – the Education Trust Fund budget that allocates funding for K-12 public schools, community colleges, and four-year universities and the General Fund that funds state agencies. Both budgets represented record high spending, but the common theme spoken by legislative budget leaders suggested tempering expectations for future revenue growth as interest earnings from federal COVID-19 relief funding – the main driver behind recent highs – tapers.

By law, the governor’s office must file the two budgets on or by the second day of the session, followed by extensive negotiations with lawmakers, who invariably amended the executive branch submission. We will continue tracking and providing updates on the budgets.

The House focused on sunset bills that determine whether various occupational licensing boards may continue operating, and nearly twenty such bills were passed on Thursday.

The Senate prioritized moving several major Republican agenda items including a bill that codifies definitions for terms like man and woman into law, and a few measures that are designed to address illegal immigration in the state.

Alabama REALTORS® is involved in several efforts to address pressing issues affecting real estate in Alabama, which include several AAR license law updates, business license fees charged by local governments, protection of property ownership from squatters, and combatting the widespread real estate scam involving seller impersonation.

License Law Proposals (3)

Recent national developments have impacted real estate practices in Alabama and created confusion among real estate professionals and consumers. These developments, including lawsuits, a U.S. Department of Justice investigation, and a National Association of REALTORS® (NAR) settlement approved by a federal court in 2024, have introduced rules and requirements that affect real estate professionals and consumers. 

Though no real estate professionals in Alabama were parties to the lawsuit, provisions of the settlement are in conflict with the current state law and affect those doing business here. It also impacts real estate transactions occurring daily across the state. The Alabama Legislature, as the elected representative body, is the appropriate venue to clarify Alabama state law and protect consumer interests.

As a result, Alabama REALTORS® will promote three AAR real estate license law bills this session to help provide greater clarity for both real estate professionals and consumers in Alabama. To avoid confusion, each bill will be filed separately and move through the legislature to final passage before the next bill is filed.

Where appropriate, Alabama REALTORS® sought, received, and incorporated feedback from the lawyers at the Alabama Real Estate Commission (AREC) to address practical challenges related to regulatory enforcement, and incorporated language from past bills promoted by AREC.

Below are summaries of what each bill does or is expected to do when filed.

HB 230 - The first AAR real estate bill was filed last Thursday, February 6. Sponsored by Rep. Randall Shedd (R-Cullman), HB 230 is a high priority bill dealing with the confusion over the timing of buyer agreements. The bill reaffirms Alabama's existing RECAD framework, emphasizing early discussions of brokerage services and compensation, while protecting consumers from premature binding contracts.

This bill clarifies that consumers in Alabama cannot be required to sign a binding contract simply to view a property. The bill requires a written buyer agreement before an offer to purchase is submitted, ensuring clear terms of representation. This balanced approach aims to provide greater transparency and consistency for both real estate professionals and consumers.

Key Provisions of HB 320:

1. RECAD Disclosures:  Clarifies that RECAD disclosures are required before a buyer views a property, but a written agreement is not required at this stage.
2. Compensation Disclosure: Requires a general explanation of compensation during the RECAD discussion and within the written company policy outlining available consumer services.
3. Written Agreements: Requires a written agreement between the licensee and consumer at specific times:
   • Sellers: Before listing a property.
   • Buyers: Before submitting an offer.
4. Terms of Compensation: Requires terms of compensation to be in brokerage agreements.
5. Referrals: Combats referral scams by requiring referral agreements between real estate licensees to be in writing.

The second AAR real estate bill is anticipated to update RECAD and other license laws on several issues.

When filed, the bill is expected to do the following:

1. RECAD Changes/Dual Agency – Bill Two makes non-substantive and substantive changes to RECAD. The biggest change is that dual agency would be limited to when one agent represents both sides of a transaction and not when two independent agents in one company represent opposite sides.
2. One Year Listing Agreements – Several years ago, a law was passed combating the so-called forty-year listing agreements filed as a lien on properties, limiting agreements affecting residential real estate to one year. Bill Two would include the one-year limitation in license law, expressly limiting residential real estate listing agreements to one year, with the option of a written extension.
3. Reasonable Requirements on Teams – Teams or groups are widely used by real estate licensees to combine resources and increase effectiveness. Unlike many other states, Alabama does not currently have license laws specifically addressing teams/groups. Bill Two would set basic requirements for teams, including advertising requirements and broker responsibilities.
4. Failed Payments to AREC – Bill Two would change the penalty for a bad check or incorrect payment to AREC from a license law violation to an administrative fee. With the proliferation of electronic payments, the number of these cases has risen dramatically and is usually due to accidentally inputting an incorrect routing or bank account number.
5. Definitions and Disclosure Updates – Bill Two would also add definitions of commonly used terms in license law and make non-substantive changes to terminology.

Bill Three is anticipated to address several items related to education and increase broker license requirements, and to make a number of non-substantive updates to clarify the current language. When filed, the bill is expected to do the following.

1. Distance Education – Distance education was widely used for pre-license, post-license, and continuing education courses during COVID-19. Bill Three adds definitions and language that would allow AREC to approve distance education courses, with requirements differentiating between pre-license/post-license courses and CE-only courses.
2. One Hour CE Courses – Bill Three would allow AREC to approve one-hour CE courses. Currently, the law requires a CE course to be a minimum of three hours.
3. Qualifying Broker Requirements – Following years of review and industry feedback, Bill Three would increase the pre-requisites to become a qualifying broker. Currently, the law allows a real estate salesperson to apply for a qualifying broker’s license after only two years with a salesperson license. Bill Three would require an applicant to take a qualifying broker course and be a licensee for at least four years.

Discussed for years, a bill addressing business license or privilege taxes charged by local governments is expected to be filed this week. Businesses pay local governments for a business license, often based on the business’s gross receipts. The current practice of collecting these income taxes is confusing, an accounting burden on businesses, vary from city-to-city, sometimes charged redundantly on the same gross receipts, subject to abuse by third-party collection firms, and provide little effective recourse for appeals.

In general, the bill would:

1. Allow citizens to appeal these charges to the Alabama Tax Tribunal, a quasi-judicial state entity that already adjudicates a number of appeals related to taxes;
2. Require local governments to report the schedules and other information related to business licenses; and
3. Provide recourse to businesses against the third-party collection companies if the companies send out mass collection letters without appropriate due diligence.

Alabama REALTORS® is in discussions with stakeholders to update the law passed last year on squatter removal. When filed, the bill would smooth out of the process after months of implementation, set reasonable timeframes for response by law enforcement, include vacant land and commercial buildings, and clarify jurisdiction between sheriffs and local law enforcement.

Seller impersonation fraud is a scam affecting states across the country, and Alabama is no exception. Alabama REALTORS® has joined with a group of interested stakeholders to explore state solutions to the scam. While specific details are being worked out, a bill will be filed later this session to help implement best practices for real estate professionals, title agents and closing attorneys, funding for education for consumers, and an improved notification and alert system when liens or changes to ownership are recorded on property.

Earlier today, the House and Senate reconvened at 1 and 2 pm respectively. Both chambers have just a few bills in position to be considered by the full body.

Today is also REALTOR® Day at the Capitol with hundreds of REALTORS® hearing presentations from legislative leaders, walking the halls of the State House to meet with their House and Senate members, and networking with state officials at the REALTORS® Annual Legislative Reception.