Alabama Law Test Outline

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Alabama Law Test Outline 40 Questions 28 of
test Steve McTyeire, Broker 205-807-5200 Steve
McT_at_gmail.com NewLocationRealty.com
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Update Advertising Points http//www.arec.alab
ama.gov/pdf/Update/update-fall-2009.pdf CAN_SPAM
Law http//www.ftc.gov/bcp/edu/microsites/spam/b
usiness.htm Do Not Call List https//www.donotc
all.gov/faq/faqbusiness.aspx
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Rebates Kickbacks http//www.arec.alabama.gov/l
egal/briefly-legal.aspGiftsRebatesKickbacks Lic
ense Law Deadlines http//www.arec.alabama.gov/pd
f/deadlines-for-commission-may2009.pdf Home
warranty payments to agents http//www.arec.alaba
ma.gov/pdf/Update/fall-2010-update.pdf Commissio
ners http//www.arec.alabama.gov/about/commissio
ners.asp
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NewLocationRealty.com Class Files http//newlo
cationrealty.com/School.html Alabama Real
Estate Commission http//www.arec.alabama.gov/ind
ex.asp Law Book http//acre.cba.ua.edu/license
_index/License_Law.html
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• The Real Estate Commission
• A. Purpose
• 34-27-1
• B. Composition (Commissioners,
• Administrative, Staff)
• 34-27-7

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• The Real Estate Commission
• A. Purpose
• Protect the public
• Regulate the business
• Require license as proof of qualification

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• The Real Estate commission
• B. Composition (Commissioners,
• Administrative, Staff)
• 9 members
• 1 from each Congressional District (7)
• 1 person not licensed
• 1 Black person - rotates among Districts
• Appointed by governor
• Confirmed by Senate
• 5 year term 2 term limit
• 21 years old
• Resident of state at least 10 years
• No real estate law, or felony convictions
• Owner of real property

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Link to Commissioners
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2. Definitions 34-27- 2 Associate Broker Any
broker other than a qualifying broker Broker Any
person licensed as a real estate broker under
this article Commission The Alabama Real Estate
Commission Or a fee paid to a broker
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Commissioner A member of the Commission Company
Lawful business organization Engage Contractual
relationship between qualifying broker and
salesperson May be employee or independent
contractor
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Inactive License License being held By the
commission office by law By order of the
commission By request of licensee License is not
valid because it was not renewed Licensee Any
Broker, Salesperson or company License
Period Oct 1 to Sept 30 renews on odd years Must
renew by Aug 31 or 150 penalty
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Person A natural person Place of Business Rural
broker may operate from home if Separate
entrance, phone and signage No other
salespersons Business in city limits Separate
office, phone, and signage Zoned commercial
Records shall be kept at office
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Qualifying Broker Broker under whom a lawfully
constituted business organization
operates Recovery Fund The Alabama Real Estate
Recovery Fund Salesperson Any person licensed
under article 1 or 2
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3. Licensing Requirements A. Activities that
require a license and Those who are exempt B.
Co-brokering C. Qualifications for a
license D. Renewal of license E.
Continuing Education F. Post License
Education G. Temporary and Original
Salesperson license
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License required if performing for another in
Alabama B Buy A Aid R Rent N
Negotiate S Sell A Auction L Lease E
Exchange
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3. Licensing Requirements A. Activities
that require a license if performed for
another Sell, exchange, purchase, rent, or lease
real estate situated within Alabama Offer to
sell, exchange, rent, or lease real estate
situated in Alabama Negotiate or attempt to
negotiate the listing, sale, exchange, purchase,
rental, or leasing of real estate situated in
Alabama
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3. A Required List or offer or attempt or agree
to list real estate for sale, rental, lease,
exchange, or trade situated in
Alabama Auction, offer, or attempt or agree to
auction real estate situated in Alabama Buy or
sell or offer to buy or sell, or otherwise
deal in options on real estate situated in
Alabama
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3. A Required Aid, attempt, or offer to aid in
locating for purchase, rent or lease any real
estate situated in Alabama Procure or assist in
procuring of prospects for the purpose of
effecting the sale, exchange, lease, or rental
of real estate situated in Alabama Present
himself or herself as being able to perform
these acts
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License not required Sell or manage personally
owned property or that of a spouse, child
or parent Attorney performing attorney
duties Acting without compensation under a
power of attorney Receiver, trustee, executor,
or guardian or acting under court order,
or authority under a will or trust
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License not required Public officers performing
their duties Persons performing administrative
duties for broker No BARN SALE Persons acting
as apartment manager Exception Condominium
manager needs license
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License not required Persons licensed as time
share sellers Different license Transactions
involving sale or lease of cemetery lots
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3 B Out of state co-brokerage Alabama broker
shall require joint listing Specifying terms
(file with Commission 10 days) Showing and
negotiating shall be supervised by Alabama
broker Advertising shall have Alabama brokers
name Alabama broker shall be liable for acts of
out of state broker Alabama broker to
determine license status of out of state
broker Earnest money to be held by Alabama
broker may except this in writing
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3C Qualifications for license Registered to
specific real estate office Trustworthy Person
whose application has not been rejected or
revoked in another state within 2 years except
for failing exam 19 years old US Citizen or
legally present If non Alabama resident,
Agree to Alabama jurisdiction
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3C Qualifications for license High school
graduate or equivalent Proof of 60 hour real
estate class Application for company license
shall be made by qualifying broker Company
must maintain a place of business Second company
location must have separate Broker
Company license
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3C Qualifications for license No person may
serve as qualifying broker for more than one
company unless All companies consent in
writing File this consent with Commission Must
be in same location
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3D Renewal of a license License period October 1
to September 30 Must renew by August 31 or incur
150 penalty License period is 2 years renewing
in odd years Salesperson 85 / year Broker
95 If notice not received about renewal It
is the responsibility of licensee to notify
Commission
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3E Continuing Education (CE) Active status
renewal requires 12 hours of elective credit 3
hours of Risk Management Must be completed by
September 30 of renewal year or License will
become inactive No exam required for CE Can
stay inactive, but must complete Continuing
education to reactivate
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3F Post License Education Must complete post
license 30 hour class Before applying for
Original License In class or online Covers
application of business Sellers, Buyers,
Financing, ect.
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3G Temporary and Original License New licensee
must get temporary license Within 6 months and
Before attending Post License class Temporary
license expires at the end of the sixth
month following issuance Example License
Issued January 5th Expires end of February plus
6 months Expires at the end of August Must
complete Post License 30 hours Before license
goes inactive September 1st in this example,
your date may differ If Post License not
completed, then Temporary License becomes
inactive and will expire 6 months later
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• License Status
• A. Transferring a license
• B. Inactive Status
• C. Reactivation of License

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4A. Transferring a license Must notify current
broker in writing AREC.gov to change online Go
inactive Activate with new broker 25 4
service charge 25 charge for any change to
license Inactive to Active, name, firm
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4B Inactive Status Automatic Inactive for
failing to meet September 30 deadline to
renew If not renewed within next 12 months
License Lapses Must start over May stay
inactive, but must renew and pay Continuing
Education need not be done
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4C Reactivation of License May stay inactive as
long as you want To activate Must meet current
15 hour CE Get broker 25
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• 5. Broker Company License
• Place of Business
• Issuance of company and branch office licenses
• Issuance of broker licenses
• Who may serve as a qualifying broker (QB)
• Responsibilities of qualifying broker (QB)
• Termination of QB status
• Serving as QB for more than one company
• Temporary QB
• Associate broker status
• Operating from home

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5A Issuance of company and branch office
licenses Each company location must have a
Company license QB at location Company QB
and branch QB share responsibility
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5B Issuance of broker licenses Been salesperson
24 of last 36 months High school or equivalent 60
Broker Course Original broker license Registered
to specific real estate office Reciprocal
license 6 hour of Alabama Law 40 question test

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5C Who may serve as a qualifying broker
(QB) Meet all broker qualifications, plus Must
be principal business In position to supervise
full time
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5D Responsibilities of qualifying broker
(QB) Responsible for all acts of
salespersons Responsible for damages caused by
salespersons Duty to see all transactions comply
with law Does not create employer- employee
relationship
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5 E Termination of QB status QB may terminate
status with written notice to Parent
company Commission QB may terminate agent
by Notifying in writing Licensee Commission
(AREC) Return license to AREC
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5F Serving as QB for more than one company QB
may serve at only one company Unless All
companies consent in writing File consent with
AREC Must all be in same location Sales or
property management Salespersons licensed under
broker may work with all companies in that
location
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5G Temporary QB Company license becomes invalid
upon Death or disability of QB Within 30 days
company may designate a Person to act as
Temporary QB may be a salesperson with 1 year
experience May operate under Temporary QB for 6
months
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5H Associate broker status Any broker other
than QB
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5 I Operating from home Company or broker
license must maintain Place of business Broker
living in a rural area may operate from
home IF Set up and maintain a office to conduct
business May not be used for living
purposes Separate telephone, entrance,
signage Broker only No salespersons may operate
from office
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Real Estate Blues
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6 Recovery Fund A. Purpose of the fund B.
Payment into the fund C. Payment from the fund
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6A Purpose of the fund An aggrieved party may
recover actual or compensatory damages As a
result of conduct in violation of RE law not
interest or court cost will not pay broker or
salesperson where acting on own behalf N/A to
time share
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6B Payment into the Recovery Fund At application
for original license for Salesperson or broker,
each applicant shall pay 30 into the Recovery
Fund One Time A salesperson who has paid
into the fund will not be required to pay
again when obtaining a broker license When
balance of fund drops below 500,000 Each active
licensee will pay additional 30
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6C Payment from the Recovery Fund When an
aggrieved person recovers a valid Judgment
against a licensee Will file claim in court and
request payment From Recovery Fund 10
days Payment will be limited to 50,000 in the
aggregate (total claim against a
licensee) Limit of 25,000 per
transaction License will be revoked until money
is repaid By licensee
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• Disciplinary Actions and Process
• Complaints
• Hearings
• Disciplinary Actions
• Rehearing
• Appeals

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• 7A Complaints
• AREC will investigate a verified complaint
• for probable cause
• Requirements for complaint
• Is person licensed
• What violations may have occurred
• Complaint will include
• Name of persons whom complaint is made
• Legal authority and jurisdiction
• Type and date of issue of license
• Section violated 34-27-10
• Brief description of acts or omissions

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7B Hearings If probable cause is found AREC
will hold a hearing on the complaint Accused
will be given 15 days notice May issue
subpoenas (cost apply) Pays mileage AREC
will issue ruling within 30 days
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7C Disciplinary Actions Any violation of this
act is a Class A misdemeanor Punishable by a
fine of 100 up to 2500 Suspend or revoke
license May require Risk Management
class Require restitution
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7D Rehearing If Accused or other party is not
happy with decision They may Ask for a
rehearing within 30 days If no response in 30
days, request is denied Rehearing does not
modify the effective date of decision
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7E Appeals Findings of AREC are final after 30
days unless An appeal is filed during this
time Put up 200 appeal bond Decision may be
stayed during appeal Within 30 AREC will file
with court Court will hear without jury Losing
party pays cost
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• Estimated Closing Statement
• Net Sheet
• The licensee who procures a written offer
• in a single family residence shall prepare
• an itemized statement of all cost associated
• with the sale based on best estimates
• Seller or Buyer your side only
• No need to have other parties net sheet
• Signed and kept on file for 3 years
• Licensee also required to furnish a detailed
• Closing statement HUD1 at closing

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• Trust Funds
• Deposit and accounting of all funds at all times
  belonging to others
• Unless relieved in writing
• In a separate account in a federally insured
  bank in Alabama
• Broker shall be a customer of bank and
• have authority to write checks and make
  deposits
• Salespersons pay over to broker all funds
  immediately
• Records must be kept for 3 years

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• Trust Funds
• Funds held in trust under contract
• May be held by either broker
• Cash deposit immediately
• Check may be held by either broker
• Check to be deposited when contract states
• Or
• Check to be deposited when offer becomes contract

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• Trust Funds
• Other trust funds shall be disbursed within 7
  days
• If transaction fails to transact or dispute
  arises,
• Written agreement required before broker may
  disburse
• Property management has 21 days to account
• for security deposit at end of lease
• Property management company gets new broker
• Must account for and transfer trust to new broker

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• RECAD
• Real Estate Consumer Agency Disclosure
• Definitions
• Agency Agreement must be in writing
• Creates fiduciary relationship
• Consumer person who obtains services
• Client Agency work for, advise
• Customer transaction broker, work with

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10 RECAD Dual agency work for both Limited
Consensual Dual Agency Must be in
writing Happens when 1 agent represents both
sides Agents with same firm represent both sides
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10 RECAD Informed consent - consumer acts
based On full disclosure Material Fact- One
that is significant to a reasonable person
affects sale
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10 RECAD No implied agency Transaction Broker
if no signed agreement As soon as reasonably
possible, before licensee Discloses confidential
information to another, Shall provide written
disclosure form describing Different forms of
representation including Those offered by
firm After disclosure consumer may choose
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10 RECAD Transaction broker assist the
transaction Single agent works for one
side Dual agent works for both sides
consensual Sub agent pre RECAD
representation where everyone worked for the
seller
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10 RECAD Duties to all Provide service
honestly and in good faith Exercise reasonable
care Keep confidential information
confidential Account for all property that
belongs to others Present written offers timely
and truthful Licensees interest must be
disclosed
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10 RECAD Duties to clients In addition to
duties to all, Loyalty clients interest
first Disclosure tell client what you
know Good and Bad Better decision No duty
to discover information Follow lawful
instructions of client
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10 RECAD All RE firms use same form
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10 RECAD Office policy Broker will adopt
written policy for Services offered under
RECAD Policy will be explained every year and
Signed by agent Kept on file for 3 years
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10 RECAD Exempt Property Management Sales
involving artificial entities Government,
companies, ect.
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• 11 Violations which may result in disciplinary
  actions
• Misrepresentation and dishonest dealing
• 1. Failure to disclose known defects that effect
• Health Safety
• Inducing a party to break a contract
• Advertising
• Listing Agreements
• Failure to give proper disclosure
• Keeping appropriate records
• Rebates
• Paying or receiving commissions
• from unlicensed persons
• Bad Checks
• J. Failure to inform Commission of suit and
  disposition
• Lotteries
• Handling of documents
• Violation of rule or order of Commission
• Offers

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11A Misrepresentation and dishonest
dealing Conduct that constitutes or demonstrates
Dishonest dealings, bad faith, or
untrustworthiness Engaging in dishonest or
fraudulent dealings when dealing with own
property or that of a spouse, child or
parent Misstatement on application about
felony
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11A 1 Failure to disclose known defects that
affect health and safety
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11B Inducing a party to break a contract For
the purpose of substituting a contract motivated
by the personal gain of the licensee
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11C Advertising Must be truthful Must contain
licensee name Must contain Brokerage name Rule
on letter size has been changed to Brokerage
name must be prominent in ad Rules apply to all
media Additional information required for web
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11D Listing Agreements May be Agency or
Not Must include expiration date No auto
renew Must leave copy with seller No net
listings
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11E Failure to give proper disclosure Latent
defects Health Safety Issues Lead Paint
Disclosure Net Sheet Personal interest in
property Alabama has no law on seller
disclosure forms or stigmatized properties
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11E Failure to give proper disclosure Alabama
is Caveat Emptor let the buyer beware Buyer
has duty to inspect Exceptions to buyer
beware Written on HAND H Health Safety
(Known) A Assumption of Duty (buyers
agent) N New Homes (warranty) D
Direct Question (must answer)
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• 11E Failure to give proper disclosure
• This box is in every general residential sales
  contract

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11F Keeping appropriate records Keep all
records 3 years
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11G Rebates Illegal to pay or receive rebates in
any real estate transaction Also violation of
Federal RESPA law
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11H Paying or receiving commissions from
unlicensed persons Licensees may be paid only by
their broker
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11I Bad Checks Presenting a bad check to the
AREC will cost you 250
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11J Failure to inform Commission of
suit and disposition Must inform AREC within 10
days of arrest or suit and its disposition
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11K Lotteries Illegal to offer free lots or
conduct lotteries for the purpose of influencing
a party to purchase
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11L Handling of Documents Illegal to fail to
furnish a copy of each document to each party
executing such Must keep copies for 3
years Listing must be left with seller at
signing Failing without cause to surrender to
the rightful owner on demand a document coming
into licensees possession
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11M Violation of rule or order of
Commission Illegal to violate any provision of
this rule, law or order of the Commission
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11N Offers Licensee acting as agent shall
transmit all written offers to the principal