Alabama License Law, Commission Rules, and Recovery Fund
Licensing framework
Alabama regulates brokerage through the Alabama Real Estate Commission under Title 34, Chapter 27 of the Alabama Code. The Commission licenses salespersons and brokers, sets education and examination requirements, adopts rules, and disciplines licensees. A salesperson must be licensed under a qualifying broker and may be compensated only by that broker; accepting a fee directly from a client or from another broker is a violation. Activities requiring a license include listing, selling, buying, exchanging, leasing, managing, and referring for compensation. Statutory exemptions cover attorneys performing professional duties, fiduciaries, and owners selling their own property.
Operational rules
Advertising must include the licensed name of the brokerage, and a licensee buying or selling on personal account must disclose the licensed status in writing. Trust funds must be deposited in a trust account and accounted for promptly; commingling is grounds for discipline. Commissions are negotiable. Licensees renew annually with continuing education, including the required risk management component, so verify the current hour requirement in the Commission rules.
Discipline and the Recovery Fund
The Commission may reprimand, fine, suspend, revoke, or place a licensee on probation for misrepresentation, fraud, undisclosed dual agency, failure to account, or unlicensed activity. The Real Estate Recovery Fund reimburses consumers who obtain a court judgment against a licensee for fraud or dishonest dealing and who cannot collect from the licensee. The claimant must first pursue the judgment and exhaust collection efforts, and the fund does not cover punitive damages, attorney fees, or losses from transactions outside licensed brokerage. A licensee whose conduct causes a fund payment must repay the fund, and the license may be suspended until repayment.
Trap
Questions often test who may pay a salesperson, when a license is required, and whether the Recovery Fund is a first-resort remedy.