AL Real Estate cheat sheet

Physical characteristics of land are immobility, indestructibility, and nonhomogeneity; economic characteristics are scarcity, location (situs), improvements, and permanence of investment.

The fixture test weighs annexation (method and permanence of attachment), adaptation (fit to the property's use), and intention of the parties; intention generally controls.

Area equivalents: 1 acre = 43,560 square feet; 1 square mile = 640 acres; 1 section = 640 acres; a quarter-section = 160 acres; a quarter-quarter section = 40 acres.

Government survey description order: state, principal meridian, township (north or south), range (east or west), section number, and aliquot part of the section.

In metes and bounds descriptions, monuments control over courses and distances, and distances control over area when those conflict.

Lot-and-block (plat) descriptions depend on a recorded subdivision plat; the recorded map, not a later survey, defines the parcel boundaries.

Police power tools include zoning, building codes, subdivision regulation, and environmental controls; a variance relieves hardship, while a special exception permits a use the ordinance lists.

A nonconforming use existed lawfully before the zoning ordinance and may continue, but is generally lost through abandonment or substantial destruction.

Air, surface, and subsurface rights may be severed and conveyed separately, creating split ownership of the same parcel.

Tenancy in common: undivided fractional shares, unequal shares allowed, no survivorship. Joint tenancy: equal shares with survivorship created by the four unities of time, title, interest, and possession.

Alabama is a notice recording state: an unrecorded conveyance is void against a later purchaser for value who takes without notice of the earlier transfer.

Deed essentials: competent grantor, identifiable grantee, words of conveyance, adequate legal description, consideration recital, grantor's signature, delivery, and acceptance.

Warranty deed covenants are seisin, right to convey, against encumbrances, quiet enjoyment, and warranty forever; a quitclaim deed carries no covenants.

Condominium: fee simple in the unit plus an undivided interest in common elements. Cooperative: a corporation holds title and the resident owns shares plus a proprietary lease.

Notice types: constructive (recorded documents), actual (direct knowledge), and inquiry (facts that put a buyer on notice to investigate further).

Title passes by operation of law through escheat, intestate succession (descent), adverse possession, and accretion or reliction.

A deed must be recorded in the probate office of the county where the land lies to give constructive notice to later purchasers.

Cost approach: value = land value + replacement cost new − physical deterioration − functional obsolescence − external obsolescence.

Sales comparison approach: adjust the comparable toward the subject; if the subject is superior to the comparable, subtract value from the comparable's price.

Income approach by direct capitalization: value = net operating income ÷ overall capitalization rate.

Gross rent multiplier = sale price ÷ gross monthly rent; indicated value = GRM × the subject's monthly rent.

Net operating income excludes debt service, income taxes, depreciation, and capital expenditures, but includes a vacancy and collection loss allowance.

Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive.

Alabama assessment ratios: Class II commercial and industrial 20%, Class III residential and agricultural 10%, Class IV agricultural, forest, and historic 15%, utility property 30%.

Alabama property tax = assessed value × millage ÷ 1,000; taxes are due October 1 and become delinquent January 1.

Reconciliation weighs the reliability of each approach for the property type and produces a single final value opinion.

Essentials of a valid contract: offer, acceptance, consideration, legal capacity, and lawful purpose; a mutual mistake of material fact can make a contract voidable.

Statute of frauds: land sale contracts, leases longer than one year, and deeds must be in writing and signed by the party to be charged.

Void means no legal effect from the start; voidable means one party may rescind; unenforceable means valid but barred by a defense such as the statute of frauds.

Buyer default commonly lets the seller keep earnest money as liquidated damages; seller default commonly lets the buyer recover the deposit and seek specific performance.

Typical sale contingencies cover financing, appraisal, title, inspection, and the buyer's home sale; failure of a contingency permits cancellation without breach.

Assignment transfers contract rights and usually delegates duties; a novation substitutes a new party and releases the original obligor from liability.

An option is a unilateral contract supported by consideration that binds the optionor to sell if the optionee elects within the stated term.

'Time is of the essence' makes deadlines enforceable conditions; without that clause, courts may allow reasonable delays.

Fiduciary duties remembered as COALD: care, obedience, loyalty, disclosure, accounting, and confidentiality; confidentiality survives termination of the agency.

Agency is created by express agreement, implied conduct, ratification, or estoppel; paying compensation alone does not create an agency relationship.

Alabama requires written agency disclosure at the outset of the relationship, before the licensee shares confidential information.

Dual agency requires informed written consent of all parties; the agent must remain neutral and may not use one party's confidential information against the other.

Agency terminates by performance, expiration, mutual agreement, revocation by the principal, renunciation by the agent, death or incapacity, or bankruptcy of the principal.

Vicarious liability: a principal is liable for the agent's acts committed within the scope of actual or apparent authority.

Undisclosed dual agency is grounds for license discipline and can allow the principal to rescind the transaction and forfeit the commission.

A buyer's agent owes loyalty to the buyer, including presenting offers, disclosing material facts, and advising on price and terms.

Loan-to-value = loan amount ÷ the lesser of sale price or appraised value; a 20% down payment produces an 80% LTV.

One discount point equals 1% of the loan amount and is prepaid interest that lowers the note rate.

Common qualifying benchmarks: conventional 28% front-end and 36% back-end ratios; FHA commonly 31% and 43%.

FHA insures loans through HUD, VA guarantees loans, and USDA guarantees eligible rural loans; conventional loans may require private mortgage insurance above 80% LTV.

RESPA/TRID: the Loan Estimate must be delivered within 3 business days of application, and the Closing Disclosure at least 3 business days before consummation.

Truth in Lending requires disclosure of the annual percentage rate, finance charge, amount financed, and total of payments.

Alabama mortgage tax is $0.15 per $100 of indebtedness; Alabama deed tax is $0.50 per $500 of consideration.

Alabama foreclosure is generally nonjudicial under a power of sale, with notice by publication before the sale date.

Leasehold estates: estate for years (fixed term, no notice needed), periodic tenancy (renews automatically), tenancy at will, and tenancy at sufferance (holdover).

Gross lease: landlord pays operating expenses; net lease: tenant pays some or all expenses; percentage lease: base rent plus a share of the tenant's gross sales.

A sublease transfers less than the tenant's full remaining term and the tenant keeps a reversion; an assignment transfers the entire remaining term.

An estoppel certificate confirms rent, deposits, and lease terms; buyers and lenders rely on it, and the tenant is later bound by its statements.

Security deposits and earnest money must be held in a trust account and accounted for; commingling with the broker's operating funds is prohibited.

Alabama's Uniform Residential Landlord and Tenant Act applies only in counties with populations of 200,000 or more.

Self-help eviction such as changing locks or removing the tenant's property is prohibited; the landlord must use the statutory unlawful detainer process.

A management agreement typically states the fee, leasing authority, spending limits, reporting duties, and the owner's reserved approvals.

Buyer debits include the purchase price, loan costs, and prepaid interest; seller debits include commission, deed tax, and loan payoff; existing taxes paid by the seller are a credit to the seller.

Proration formula: annual amount ÷ 365 × number of days owned; the seller typically owes recurring expenses through the day before closing.

Owner's title insurance protects the buyer for as long as ownership lasts; the lender's policy covers only the loan balance and declines as the loan is paid down.

A chain of title search reveals recorded transfers and liens; a cloud on title is removed by a corrective deed or a quiet title action.

Section 1031 exchange: like-kind property held for productive use; replacement property must be identified within 45 days and acquired within 180 days of closing.

FIRPTA requires the buyer to withhold 15% of the gross sales price when the seller is a foreign person.

Alabama deeds are recorded with the probate judge of the county where the land lies; recording gives constructive notice under the notice statute.

Settlement escrow disburses only when the deed is delivered, funds are good, and the lender's closing conditions are satisfied.

Commission = sale price × commission rate; a cooperating broker's share is a percentage of the total commission, not of the sale price.

Area: rectangle = length × width; triangle = ½ × base × height; circle = πr²; convert square feet to acres by dividing by 43,560.

Seller net proceeds = sale price − loan payoff − commission − seller closing costs − prorated expenses the seller owes.

Income math: effective gross income − operating expenses = NOI; value = NOI ÷ cap rate; cap rate = NOI ÷ price.

Gross rent multiplier = price ÷ rent; value = GRM × subject rent, using monthly rent for a monthly GRM and annual rent for an annual GRM.

Alabama deed tax: round the consideration up to the next $500 and multiply by $0.50 (roughly 0.1% of price).

Property tax = assessed value × millage ÷ 1,000, and assessed value = market value × the applicable assessment ratio.

Amortization: monthly payment = loan amount × the payment factor per $1,000; total interest = (payment × number of payments) − principal.

Down payment percentage = down payment ÷ purchase price; loan amount = purchase price − down payment.

The Alabama Real Estate Commission licenses brokers and salespersons and adopts rules codified in Alabama Administrative Code Chapter 790-X.

A salesperson must be sponsored by a qualifying broker and may not accept compensation for brokerage services directly from a client.

Prelicense education is 60 clock hours for a salesperson; broker applicants complete the 60-hour broker course plus the required active experience.

Continuing education is required for license renewal, and a lapsed license may not be used to perform brokerage activity until reinstated.

The Recovery Fund reimburses consumers who hold a court judgment for a licensee's fraud or dishonest dealing; it does not pay commissions, punitive damages, or attorney fees.

Brokers must keep client trust funds in a separate trust account, retain transaction records, and produce them to the Commission on request.

Advertising must identify the licensed brokerage name; a salesperson may not advertise in a way that suggests independent licensure.

Commission discipline includes fines, required education, suspension, and revocation, with hearings following the Alabama Administrative Procedure Act.

Federal Fair Housing Act protected classes: race, color, religion, sex, national origin, familial status, and disability.

Alabama has no comprehensive state fair housing statute; complaints are generally filed with HUD or a substantially equivalent local agency.

FHA exemptions include owner-occupied buildings of four or fewer units, certain owner-sold single-family homes without a broker, and qualifying housing for older persons.

Alabama's Uniform Residential Landlord and Tenant Act governs deposits, notice, repairs, and eviction procedure only in counties with 200,000 or more residents.

Alabama has not adopted an implied warranty of habitability for residential leases; landlords remain bound by the lease and applicable health and safety codes.

Alabama agency disclosure must be in writing and provided before the licensee shares confidential information or agrees to represent a party.

Alabama does not prescribe a mandatory state sales contract form; licensees commonly use Alabama Association of REALTORS® forms together with Commission-promulgated disclosure forms.

Under Alabama's URLTA, a month-to-month tenancy is terminated by 30 days' notice, while a fixed-term lease ends on its stated date without notice.

Familial status protection does not apply to housing that qualifies as housing for older persons under the 55-and-over or 62-and-over tests.