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HB357 INTRODUCED
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HB357
EJL5M9C-1
By Representative Hollis
RFD: Boards, Agencies and Commissions
First Read: 29-Jan-26
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EJL5M9C-1 01/29/2026 VSM (L)ma 2026-205
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First Read: 29-Jan-26
SYNOPSIS:
Under existing law, a person holding an
equitable interest in real estate, defined as a right
in contract or agreement to sell or transfer that real
estate, may sell, assign, or offer to assign that right
for a fee under certain circumstances without
disclosing to the potential buyer that the person is
not the deed owner. Also under existing law, it is
unlawful for a person to sell real property for a fee
unless licensed with the Alabama Real Estate Commission
as a broker or salesperson.
This bill would provide that a person who holds
only an equitable interest in property is not exempt
from realtor and broker licensing requirements.
This bill would authorize the Alabama Real
Estate Commission to initiate disciplinary action and
impose penalties for a licensee's failure to disclose
certain aspects of the sale or assignment of equitable
interests, and failure to include a fixed closing date
in an equitable interest contract.
This bill would also make nonsubstantive,
technical revisions to update the existing code
language to current style.
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A BILL
TO BE ENTITLED
AN ACT
Relating to the Alabama Real Estate Commission; to
amend Sections 34-27-2 and 34-27-36, as last amended by
2025-380, 2025 Regular Session, Code of Alabama 1975; to
require the owner of an equitable interest in real estate to
be licensed by the commission if the owner transfers the
interest for a fee; to establish certain disclosures to be
used in equitable interest transactions; to provide that a
licensee's failure to provide equitable interest disclosures
or failure to include a closing date in an equitable interest
contract may subject the licensee to fines and penalties; and
would also make nonsubstantive, technical revisions to update
the existing code language to current style.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 34-27-2 and 34-27-36, Code of
Alabama 1975, as last amended by Act 2025-380, 2025 Regular
Session, are amended to read as follows:
"§34-27-2
(a) For purposes of Articles 1 and 2 of this chapter,
the following terms have the following meanings:
(1) ASSOCIATE BROKER. Any broker other than a
qualifying broker.
(2) BROKER. Any person licensed as a real estate broker
under Articles 1 and 2 of this chapter.
(3) BUYER'S AGREEMENT. An agreement between a real
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(3) BUYER'S AGREEMENT. An agreement between a real
estate company and a person through under which the company
agrees to assist the person with the purchase of real property
in exchange for a fee, whether as a fiduciary or
non-fiduciary.
(4) COMMISSION. The Alabama Real Estate Commission,
except where the context requires that it means the fee paid
to a broker or salesperson.
(5) COMMISSIONER. A member of the commission.
(6) COMPANY. Any sole proprietorship, corporation,
partnership, branch office, or lawfully constituted business
organization as the Legislature may provide for from time to
time, which is licensed as a company under Articles 1 and 2 of
this chapter.
(7) ENGAGE. Contractual relationships between a
qualifying broker and an associate broker or salesperson
licensed under him or her, whether the relationship is
employer-employee, independent contractor, or otherwise.
(8) EQUITABLE INTEREST. Any interest or right in a
contract or agreement to purchase residential real estate held
by a party to that contract or agreement.
(9) INACTIVE LICENSE. A license which is being held by
the commission office by law, order of the commission, at the
request of the licensee, or which is renewable but is not
currently valid because of a failure to renew.
(9)(10) LICENSEE. Any broker, salesperson, or company.
(10)(11) LICENSE PERIOD. That period of time beginning
on October 1 of a year designated by the commission to be the
first year of a license period and ending on midnight
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first year of a license period and ending on midnight
September 30 of the year designated by the commission as the
final year of that license period.
(11)(12) LISTING AGREEMENT. An agreement between a
company and an owner wherein under which the company agrees to
assist the owner in the sale of the owner's real property in
exchange for a fee, whether as a fiduciary or a non-fiduciary.
The term includes an agreement giving the company the right to
list or market the owner's real property upon the owner's
future decision to sell the property.
(12)(13) PERSON. A natural person.
(13)(14) PLACE OF BUSINESS.
a. A licensed broker living residing in a rural area of
this state who operates and operating from his or her home,
provided that he or she sets up establishes and maintains an
office for the conduct of the real estate business, which
shall not be used for living purposes or occupancy other than
the conduct of the real estate business. The office shall be
used by the broker only and not as a place of business from
which any additional licensee operates under his or her
license. The office shall have a separate business telephone,
have a separate entrance, and be properly identified as a real
estate office.
b. All licensees located within the city limits or
police jurisdiction of a municipality shall operate from a an
office with a separate office located in the city limits or
police jurisdiction address . The office shall have a business
telephone, meet comply with all other regulations commission
rules of the Real Estate Commission, and be properly
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rules of the Real Estate Commission, and be properly
identified as a real estate office. Hardship cases may be
subject to waiver of exempt from this regulation upon
application and approval by the commission.
c. All business records and files shall be kept at the
place of business as required by in accordance with applicable
law or Real Estate Commission rules.
(14)(15) PRINCIPAL BROKER. As used in other states, the
term has the same meaning as "qualifying broker" in this
state.
(15)(16) QUALIFYING BROKER. A broker under whom a sole
proprietorship, corporation, partnership, branch office, or
lawfully constituted business organization , as the Legislature
may from time to time provide , is licensed, or a broker
licensed as a company to do business as a sole proprietorship
who is responsible for supervising the acts of the company or
proprietorship and all associated real estate licensees
licensed therewith .
(16)(17) RECOVERY FUND. The Alabama Real Estate
Recovery Fund.
(17)(18) RESIDENTIAL. Pertaining to real property
located in the state used primarily as a residence.
(19) SALESPERSON. Any person licensed as a real estate
salesperson under Articles 1 and 2 of this chapter.
(18)(20) TEAM. Two or more licensees within the same
company who work together to provide services for which a
license is required and who hold themselves out to the public
as a distinct group within the company.
(b) The licensing requirements of Articles 1 and 2 of
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(b) The licensing requirements of Articles 1 and 2 of
this chapter shall not apply to any of the following persons
and transactions:
(1) Any owner in the managing of, or in or consummating
a real estate transaction involving , his or her own real
estate or the real estate of his or her spouse, child, or
parent. This exception does not apply to a person who is
merely the owner of an equitable interest in property that is
the subject of the transaction.
(2) An attorney-at-law performing his or her duties as
an attorney-at-law.
(3) Persons acting without compensation and in good
faith under a duly executed power of attorney authorizing the
consummation of a real estate transaction.
(4) Persons or a state or federally chartered financial
institution acting as a receiver, trustee, administrator,
executor, or guardian; or acting under a court order or under
the authority of a trust instrument or will.
(5) Public officers performing their official duties.
(6) Persons performing general clerical or
administrative duties for a broker so long as , provided the
person does not physically show listed property.
(7) Persons acting as the manager for of an apartment
building or complex. However, this exception shall not apply
to a person acting as an on-site manager of a condominium
building or complex.
(8) Persons licensed as time-share sellers under
Article 3 of this chapter performing who perform an act
consistent with that article.
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consistent with that article.
(9) Transactions involving the sale, lease, or transfer
of cemetery lots.
(c) Notwithstanding subdivision (b)(1), the licensing
requirements in Articles 1 and 2 of this chapter shall apply
to any person selling an equitable interest in property unless
the sale is to a spouse, child, or parent. "
"§34-27-36
(a)(1) The commission or its staff, on its own
initiative or on the a verified written complaint in writing
of by any person, may investigate the actions and records of a
licensee. The commission may issue subpoenas and compel the
testimony of witnesses and the production of records and
documents during an investigation. If probable cause is found,
a formal complaint shall be filed , and the commission shall
hold a hearing on the formal complaint.
(2) In each instance in which a licensee is found in
violation of any of the conduct prohibited in subsection (b),
the commission may impose any of the following penalties:
a. A fine of not less than one hundred dollars ($100)
nor more than five thousand dollars ($5,000).
b. Require the licensee to complete an approved
education course or courses in addition to completing the
existing continuing education requirements.
c. Issue a public reprimand.
d. Revoke or suspend any or all licenses held by the
licensee under this chapter by the licensee . The suspension
may continue until such time as the licensee has completed an
approved continuing education course, has made restitution to
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approved continuing education course, has made restitution to
accounts containing funds to be held for other parties, or
both. The commission may also stay the revocation or
suspension of a license and require completion of an approved
education course, require the making of restitution to
accounts containing funds to be held for other parties, or
both.
(b) A licensee is prohibited from doing all of the
following:
(1) Procuring or attempting to procure a license for
himself or herself or another by fraud, misrepresentation, or
deceit, or by making a material misstatement of fact in an
application for a license.
(2) Engaging in misrepresentation or dishonest or
fraudulent acts when selling, buying, trading, or renting real
property of his or her own or of a spouse, child, or parent.
(3) Making a material misrepresentation or failing to
disclose to a potential purchaser or lessee any latent
structural defect or any other defect known to the licensee.
Latent structural defects and other defects do not refer to
trivial or insignificant defects but refer to those defects
that would be a significant factor to a reasonable and prudent
person in making a decision to purchase or lease.
(4) Making any false promises of a character likely to
influence, persuade, or induce any person to enter into any
contract or agreement.
(5) Pursuing a continued and flagrant course of
misrepresentation or the making of false promises through
agents or salespersons or any medium of advertising or
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agents or salespersons or any medium of advertising or
otherwise.
(6) Publishing or causing to be published any
advertisement that deceives or that is likely to deceive the
public, or that in any manner tends to create a misleading
impression.
(7) Acting for more than one party in a transaction
without the knowledge and written consent of all parties for
whom he or she acts.
(8)a. Failing, within a reasonable time, to properly
account for or remit money coming that comes into his or her
possession which and belongs to others, or commingling money
belonging to others with his or her own funds.
b. Failing to deposit and account for at all times all
funds belonging to others , or being held for others, in a
separate federally insured account or accounts in at a
financial institution located in Alabama.
c. Failing to keep for at least three years a complete
record of funds belonging to others showing to whom the money
belongs, the date deposited, the date of withdrawal, and other
pertinent information for at least three years .
(9) Placing a sign on any property offering it for
sale, lease, or rent without the consent of the owner.
(10) Failing to voluntarily furnish a copy of each
listing, contract, lease, and other document to each party
executing the document with reasonable promptness.
(11) Paying any profit, compensation, commission, or
fee to, or dividing any profit, compensation, commission, or
fee with, anyone other than a licensee or a multiple listing
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fee with, anyone other than a licensee or a multiple listing
service. This subdivision shall not prevent an associate
broker or salesperson from owning any lawfully constituted
business organization, including, but not limited to, a
corporation or, limited liability company , or limited
liability corporation, for the purpose of receiving payments
contemplated in this subsection. The business organization
shall not be required to be licensed under this chapter, and
shall not engage in any other activity requiring a real estate
license.
(12) Paying or receiving any rebate from any person in
a real estate transaction.
(13) Inducing any party to a contract to breach the
contract for the purpose of substituting a new contract , where
the substitution is motivated by the personal gain of the
licensee licensee's personal gain .
(14) If the licensee is a salesperson or associate
broker, accepting a commission or other valuable consideration
for performing any act for which a license is required from
any person or company , except his or her qualifying broker.
(15) If the licensee is a qualifying broker or company,
allowing a salesperson or associate broker licensed under him
or her to advertise himself or herself as a real estate agent
without the name or trade name of the qualifying broker or
company appearing prominently on the advertising; or , if the
licensee is a salesperson or associate broker, advertising
himself or herself as a real estate agent without the name or
trade name of the qualifying broker or company under whom the
salesperson or associate broker is licensed appearing
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salesperson or associate broker is licensed appearing
prominently on the advertising. For purposes of this
subdivision, "prominently" means using a font size that is
equal to or larger than any other name, text, or logo, other
than terms like "for sale" or "for lease," in the
advertisement and situated and sized for the purpose of
gaining the attention of consumers viewing the advertisement.
(16) Establishing an association, by employment or
otherwise, with an unlicensed person who is expected or
required to act as a licensee, or aiding, abetting, or
conspiring with a person to circumvent the requirements of
this chapter.
(17) Failing to disclose to an owner the licensee's
intention to acquire, directly or indirectly, an interest in
property which he or she or his or her associates have been
employed to sell.
(18) Violating or disregarding any provision of this
chapter or any rule, regulation, or order of the commission.
(19) If a broker accepts Accepting a "net listing"
agreement for the sale of real property or any interest
therein in real property where the licensee is not a buyer,
seller, or assigning buyer in the transaction . A "net listing"
agreement stipulates a net price to be received by the owner ,
with the any excess due to be received by the broker as his or
her commission.
(20) Misrepresenting or failing to disclose to any
lender, guaranteeing agency, or any other interested party ,
the true terms of a sale of real estate.
(21) Failing to inform the buyer or seller at the time
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(21) Failing to inform the buyer or seller at the time
an offer is presented that he or she will be expected to pay
certain closing costs and the approximate amount of those
costs.
(22)a. Having entered a plea of guilty or nolo
contendere to, or having been found guilty of or convicted of,
a felony or a crime involving moral turpitude.
b. Having a final money judgment rendered against him
or her which results from an act or omission occurring in the
pursuit of his or her real estate business or involves the
goodwill of an existing real estate business.
(23) Offering free lots or conducting lotteries for the
purpose of influencing a party to purchase or lease real
estate.
(24) Failing to include a fixed date of expiration in a
written listing agreement or failing to leave a copy of the
agreement with the principal.
(25) Conduct that constitutes or demonstrates dishonest
dealings, bad faith, or untrustworthiness.
(26) Acting negligently or incompetently in performing
an act for which a person is required to hold a real estate
license.
(27) Failing or refusing , on demand , to produce a
document, book, or record in his or her possession concerning
a real estate transaction conducted by him or her for
inspection by the commission or, its authorized personnel , or
representative.
(28) Failing within a reasonable time to provide
information requested by the commission during an
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information requested by the commission during an
investigation or after a formal complaint has been filed.
(29) Failing without cause to surrender to the rightful
owner, on demand, a document or instrument coming that comes
into his or her possession.
(30) If a qualifying broker or company, failing to keep
in his, her, or its files copies of all contracts, leases,
listings, and other records pertinent to real estate
transactions for a period of three years.
(31) When selling, offering to sell, assigning, or
offering to assign an equitable interest in a contract to
purchase residential real estate:
a. Failing to disclose in writing to a potential buyer
that the holder of the equitable interest is not the deed
holder of the property and is only offering to sell or assign
his or her equitable interest; or
b. Failing to disclose in writing to a seller both of
the following:
1. The intent to assign an equitable interest in the
seller's real estate prior to offering to assign the interest.
2. The assignment of the interest within three calendar
days following the assignment.
c. Failing to include a fixed closing date with no
automatic extension in the contract that establishes the
equitable interest.
(c) If it appears that a person or business entity has
engaged, or is about to engage, in an act or practice
constituting a violation of Article 1 or 2 of this chapter or
any rule or order of the commission, the commission, through
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any rule or order of the commission, the commission, through
the Attorney General, may institute legal actions to enjoin
the act or practice and to enforce compliance with Articles 1
and 2 of this chapter or any rule or order of the commission.
To prevail in an action, it shall not be necessary to allege
or prove either that an adequate remedy at law does not exist
or that substantial or irreparable damage would result from
the continued violation.
(d)(1) Notwithstanding any other provisions of law, the
commission may issue an order requiring any accused person or
business entity to cease and desist from engaging in
activities requiring a license under this chapter when the
accused person or business entity is not licensed under this
chapter. The order shall be entered by the executive director
after a finding of probable cause by the commission staff. The
order shall become final 15 days after its service upon the
accused, unless the accused requests a hearing before the
commission. Upon hearing the case and finding violations, the
commission may do any of the following:
a. make Make the cease and desist order final .
b. and the commission may impose Impose a fine for each
violation in an amount consistent with the range of fines
applicable to licensees .
c., and in addition, may impose Impose a fine in the
amount of any gain or economic benefit that was derived from
the violation .
d., and in addition, may impose Impose a fine in the
amount of the commission's costs incurred by the commission .
Any fines not paid as ordered shall be enforceable in any
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Any fines not paid as ordered shall be enforceable in any
court with competent jurisdiction and proper venue.
(2) Notwithstanding any other provisions of law, the
commission may decline to issue an order requiring any accused
person or business entity to cease and desist from engaging in
activities requiring a license under this chapter when the
accused person or business entity is not licensed under this
chapter. In this instance, the commission shall proceed to
give appropriate notice of the violations and hold a hearing.
Upon hearing the case and finding violations, the commission
may:
a. impose Impose a fine for each violation in an amount
consistent with the range of fines applicable to licensees ;
b., and in addition, may impose Impose a fine in the
amount of any gain or economic benefit that was derived from
the violation ;
c., and in addition, may impose Impose a fine in the
amount of the commission's costs incurred. Any fine or fines
not paid as ordered shall be enforceable in any court with
competent jurisdiction and proper venue.
(3) Any fine or fines imposed by this subsection that
are not paid as ordered shall be enforceable in any court of
competent jurisdiction and proper venue.
(e) The commission shall notify the licensee and
qualifying broker in writing regarding the complaint.
(f) The commission shall notify the complainant,
licensee, and qualifying broker in writing regarding of the
disposition of the complaint.
(g) If a licensee presents a form of payment to the
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(g) If a licensee presents a form of payment to the
commission , or to any third party on the commission's behalf ,
which that is declined or rejected by a financial institution
or merchant service company, the licensee shall have 30 days,
upon from electronic notification from by the commission, to
submit full and valid payment for of the initial fee or fine
and, plus an additional fee for submitting the faulty payment,
not to exceed the maximum amount allowed by Section 8-8-15.
Failure to submit full and valid payment within 30 days of
electronic notification by the commission shall result in the
licensee's license becoming inactive until the licensee
submits full payment. Failure to submit full and valid payment
within six months after electronic notification by the
commission shall result in the licensee's license lapsing."
Section 2. This act shall become effective on October
1, 2026.
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