Dear Alabama REALTORS®,

We are writing to inform you of an important update to Alabama real estate license law that will take effect on April 18, 2025.

Background: 
The past 18 months have brought significant challenges impacting our members and their business practices. These developments, including lawsuits, a Department of Justice investigation, and a National Association of REALTORS® (NAR) settlement approved by a federal court in 2024, introduced rules that conflicted with existing Alabama law. These developments created confusion and challenges for both real estate professionals and consumers.

The 2024 NAR settlement introduced a rule requiring written agreements with prospective buyers before showing properties. This raised concern among licensees, consumers, consumer advocates and the United States Department of Justice, who argue it limits consumer choice and raises antitrust issues. Alabama and its real estate licensees were not a party to the lawsuit, yet the settlement provisions affected real estate transactions statewide.

HB230/Alabama Act 2025-59: 

To address these issues, AAR pursed legislative solutions during the 2025 Regular Legislative Session to resolve these challenges and ensure clarity and consistency. With your help and engagement, we were successful. Earlier this week, Alabama Act 2025-59 was signed into law by Governor Kay Ivey after passing both Chambers of the Alabama Legislature. We are grateful for the legislature’s support of HB230 and that our members had a voice for the first time in this process through a democratically elected body. This new law will take effect next month on April 18, 2025.

Key Provisions:

We are excited that HB230 will provide greater transparency for consumers in their first interaction with an agent in the home buying process and allow them the opportunity to build a relationship with an agent before entering into a buyer’s agreement.

• RECAD Disclosures: Act 2025-59 reaffirms Alabama’s RECAD framework and clarifies that the RECAD Brokerages Services Disclosure Form and a copy of your Agency Disclosure Office Policy are required before a buyer tours a property.
• Compensation Disclosure: Act 2025-59 increases transparency and disclosure by requiring that your Agency Disclosure Office Policy includes a general explanation of your compensation.
• Written Agreements: Act 2025-59 clarifies that consumers in Alabama cannot be required to sign a premature binding contract simply to view a property. After a consumer has had time to build a relationship with a licensee, the law requires a written agreement between the licensee and consumer at specific times:
  • Buyers: Before submitting an offer to purchase.
  • Sellers: Before listing a property.
• Terms of Compensation: Requires terms of compensation to be included in brokerage agreements.
• Referral Agreements: Referral agreements are required to be in writing.

These requirements will apply to all Alabama real estate license holders, not just REALTORS® or REALTOR® MLS Participants effective April 18, 2025. Please continue current business practice until the law changes on April 18, 2025.

AAR's Legal Team will have more information available in the coming weeks. Please save the date for a live webinar on April 2 at 10:00 am to review the law, as well as to answer any questions you may have. The webinar is free, but registration is required. Use the link below to register.

Thank you for taking the time to read this letter. This change was made possible by your membership in AAR and engagement with issues impacting the real estate industry. Our top mission and priority is filling the needs of the grassroots REALTORS® who look to us for support. It is your needs that guide every decision we make and every action we take. We consider it a distinct privilege to be able to advocate on your behalf and inform you about the important things that impact your business.

Warm regards,

Mary Jane Owen
Public Policy Chair
Alabama Association of REALTORS®

Jeremy Walker
Chief Executive Officer
Alabama Association of REALTORS®