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HB586 ENGROSSED
Page 0
HB586
2J582II-2
By Representative Wilcox
RFD: Boards, Agencies and Commissions
First Read: 05-Mar-26
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HB586 Engrossed
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First Read: 05-Mar-26
A BILL
TO BE ENTITLED
AN ACT
Relating to consumer protection; to amend Sections
8-42-1, 8-42-2, and 8-42-3, Section 34-27-2, as last amended
by 2025-380, 2025 Regular Session, Sections 34-27-30 and
34-27-36, as last amended by 2025-308, 2025 Regular Session,
Code of Alabama 1975; to define "equitable interest" and "real
estate wholesaling,"; to require certain disclosures in
wholesaling transactions; to require a real estate wholesaler
to be licensed with the Alabama Real Estate Commission; to
provide that the Alabama Securities Commission has concurrent
jurisdiction with the Alabama Real Estate Commission to
regulate real estate wholesaling; to provide that failure to
provide the required disclosures may subject the wholesaler to
fines and penalties; to authorize the Alabama Real Estate
Commission to refer real estate wholesaling matters to the
Alabama Securities Commission for investigation and
enforcement; Sections 8-42-1.1, 8-42-1.2, 8-42-1.3, and 8-42-4
are added to the Code of Alabama 1975; to authorize the
Alabama Securities Commission to enforce violations of
investment-oriented real property solicitation disclosure
requirements; to provide that the Alabama Securities
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requirements; to provide that the Alabama Securities
Commission has concurrent jurisdiction with the Alabama Real
Estate Commission to regulate real estate wholesaling; to
provide fines and penalties for wholesaling and unsolicited
offer violations; to provide for rescission of unsolicited
real estate contracts in certain circumstances; to authorize
the Alabama Securities Commission to establish standard
disclosure language for investment-oriented solicitations; and
to 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 8-42-1, 8-42-2, and 8-42-3, Section
34-27-2, as last amended by 2025-380, 2025 Regular Session,
Sections 34-27-30, and 34-27-36, as last amended by 2025-308,
2025 Regular Session, Code of Alabama 1975, are amended to
read as follows:
"§8-42-1
The Legislature finds and declares all of the
following:
(1) Wholesaling real property occurs when a buyer
enters into a contract for purchase and sale of a
single-family residential property with the seller of the
property thereby creating the buyer's equitable interest in
the property, the buyer then finds a subsequent purchaser
willing to pay a higher price for the property and then
assigns its interest to the subsequent purchaser for a fee.
Many modern real estate schemes no longer focus on the
legitimate purchase and ownership of property. Instead, they
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legitimate purchase and ownership of property. Instead, they
aim to extract economic value from property owners through
resale, assignment, optioning, and complex contract
structures. These schemes are carried out at scale by large
entities operating through networks of affiliates and
individuals. Although presented as real estate transactions,
these arrangements function in practice as financial
investment products secured by real estate and should be
regulated with the same transparency and oversight as other
financial investments and similar frauds. These practices most
often harm seniors, long-term owners, heirs, and financially
vulnerable families, and undermine confidence in the real
estate market.
(2) Certain unfair service agreements provide a real
estate company with the right to market, list, or assist in
selling a residential property for up to 40 years, binding
homeowners and successors in interest through a recorded
memorandum and penalizing the homeowner or successor in
interest for breach of the agreement.
(3) The practices of wholesaling residential real
estate, and recording these unfair service agreements, pose a
significant risk to Alabama homeowners if left unregulated.
(4) The lack of any restrictions enables predatory
practices against homeowners, especially those who have lived
in a home for a long period of time, leading to financial
loss, equity theft and resulting in confusion for unsuspecting
subsequent purchasers.
(5) The Legislature concludes the following in the
interest of protecting Alabama homeowners and home buyers
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interest of protecting Alabama homeowners and home buyers
property owners :
a. Disclosure of the limited interest, marketing, and
assignment of the buyer's equitable interest in the
homeowner's property should be required of buyers engaging in
wholesaling.
b. Unfair service agreements create clouds on the
titles of Alabama homes and burden Alabama homeowners with
false promises, are against the public interest, and
constitute unreasonable restraints on the alienation of real
property.
c. Investment-oriented solicitations involving real
property present risks comparable to those of securities
transactions and warrant disclosure-based regulation.
d. Nothing in this section shall be construed to
infringe on the private property rights of an individual to
acquire real property for his or her own use, ownership, or
benefit.
e. Nothing in this section shall be construed to
require an individual to be licensed in order to acquire real
property for his or her own use, ownership, or benefit.
f. The Legislature finds that unsolicited offers to
purchase real property may present a heightened risk of
unfairness, particularly when the purchase price is below the
real property's most recent tax assessed value, when the
seller is an individual in need of protective services and
vulnerable to elder abuse and exploitation as defined in
Chapter 9 of Title 38, or the seller did not receive the
professional assistance of a licensed real estate agent, as
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professional assistance of a licensed real estate agent, as
defined in Chapter 27 of Title 34, or a licensed attorney, as
defined in Chapter 3 of Title 34. "
"§8-42-2
(a) A person may acquire an equitable interest in a
single-family residential property as the buyer under a
contract for the purchase and sale of the property and then
may assign or offer to assign the interest for a fee if the
buyer discloses in writing all of the following :
(1) To any potential subsequent purchaser or assignee,
the nature of the buyer's equitable interest that the seller
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 .;
(2) To the seller of the property, the buyer's intent
to market or assign its equitable interest in the seller's
real estate prior to commencing any marketing of the
property .;
(3) To the seller of the property, the The effective
date of any assignment of the buyer's interest to a subsequent
purchaser of the property at least three business calendar
days prior to the effective date of any assignment .; and
(4) A fixed closing date with no automatic extensions
in the contract that established the equitable interest.
(b) Written disclosure under subsection (a) shall be
required for the intent to market and transfer an equitable
interest in residential real property, as limited by
subsection (d), whether by assignment, novation, or any other
similar method of transferring an interest in real property.
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similar method of transferring an interest in real property.
(c)(1) A violation of this section is a Class C
misdemeanor.
(2) In addition to criminal penalties, a person
violating this section may be liable to the person to whom
disclosure is required in an amount equal to three times the
fee or amount received by the buyer pursuant to the assignment
subject to civil fines and penalties as determined by the
commission pursuant to Section 8-42-1.3 and by the Alabama
Real Estate Commission pursuant to Section 34-27-36 .
(3) Enforcement of this section shall be governed by
Section 8-42-1.2.
(d) This section shall only apply to transactions
involving single-family residential property and shall not
apply to any other property transactions .
(e) This section shall not infringe on the right of the
parties to otherwise agree by contract.
(f) This section shall not apply to predevelopment
activity for residential subdivisions, condominiums, or other
residential predevelopment activity. "
"§8-42-3
(a) For purposes of this section the following terms
have the following meanings:
(1) RECORDING. Presenting a document to a county judge
of probate for official placement in the public land records.
(2) RESIDENTIAL REAL ESTATE. Real property located in
this state which is used primarily for a dwelling and contains
one to four dwelling units.
(3) SERVICE AGREEMENT. A contract under which a person
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(3) SERVICE AGREEMENT. A contract under which a person
agrees to provide services in connection with the purchase or
sale of residential real estate.
(4) SERVICE PROVIDER. An individual or entity that
provides services to another party under a service agreement.
(5) UNFAIR SERVICE AGREEMENT. A service agreement in
which the services subject to the agreement are not performed
within one year after the date upon which the agreement
commences and provides any of the following:
a. Purports to run with the land or to be binding on
future owners of interests in the real property.
b. Allows for assignment of the right to provide the
service without notice and agreement of the owner of
residential real estate.
c. Purports to create a lien, encumbrance, or other
real property security interest.
(b)(a) This chapter does not apply to any of the
following:
(1) A home warranty or other type of similar product
that covers the cost of maintenance of for a major housing
home system, such as plumbing or electrical wiring, for a set
period of time from the date a house is sold.
(2) An insurance contract.
(3) An option to purchase or right of refusal to
purchase real estate.
(4) A maintenance or repair agreement entered into by a
homeowners' association in a common interest community.
(5) Agreements to manage residential real estate.
(6) A declaration of any covenants, conditions, or
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(6) A declaration of any covenants, conditions, or
restrictions created in the formation of a homeowners'
association, a group of condominium owners, or other common
interest community, or an amendment to the declaration.
(7) A mortgage loan or commitment to make or receive a
mortgage loan.
(8) A security agreement under Alabama's Uniform
Commercial Code, relating to the sale or rental of personal
property or fixtures.
(9) Water, sewer, electrical, telephone, cable, or
other regulated utility service providers.
(c)(b) This section does not impair the rights granted
by a mechanic's or materialman's lien under Division 8 of
Article 5 of Chapter 11 of Title 35 , or by another any other
judicially imposed lien.
(d)(c) If a service agreement is unfair under this
section chapter , it is unenforceable.
(e)(d) If a person enters into an unfair service
agreement with a consumer, that agreement shall be deemed a
deceptive act under the Deceptive Trade Practices Act,
commencing with Section 8-19-1.
(f)(e)(1) No person shall record or cause to be
recorded an unfair service agreement, or a notice or
memorandum of an unfair service agreement , in the this state.
(2) If an unfair service agreement is recorded in this
state, it the agreement shall not be deemed to provide actual
or constructive notice against an otherwise bona fide
purchaser of the residential real property to which it the
agreement pertains, or against a creditor with a security
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agreement pertains, or against a creditor with a security
interest in the residential real property to which it pertains
that property .
(3) A service provider who records or causes to be
recorded an unfair service agreement , or a notice or
memorandum thereof of an unfair service agreement, in this
state is liable to an affected party for statutory damages in
the amount of ten thousand dollars ($10,000) in statutory
damages .
(g)(f) If an unfair service agreement, or a notice or
memorandum of an unfair service agreement, is recorded in the
state, any party with an interest in the residential real
property to which it the agreement pertains may take either or
both of the following actions:
(1) Apply to the circuit court in the county where the
recording exists is located to seek a court order declaring
the agreement is void and of no effect .
(2) In addition to the statutory damages described in
subdivision (f) (e)(3), recover actual damages, plus costs and
attorney fees as may be proven against the service provider
who recorded the agreement."
"§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 that 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.
(10) 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
September 30 of the year designated by the commission as the
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September 30 of the year designated by the commission as the
final year of that license period.
(9)(11) LICENSEE. Any broker, salesperson, or company.
(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.
(13) NET LISTING AGREEMENT. An agreement that
stipulates a net price to be received by the owner with the
excess due to be received by a licensee as commission.
(12)(14) PERSON. A natural person.
(13)(15) 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
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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
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)(16) PRINCIPAL BROKER. As used in other states, the
term has the same meaning as "qualifying broker" in this
state.
(15)(17) 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)(18) REAL ESTATE WHOLESALING. The practice of
assigning or marketing the assignment of an equitable interest
in residential property for profit.
(19) RECOVERY FUND. The Alabama Real Estate Recovery
Fund.
(17)(20) RESIDENTIAL. Real property located in this
state which is used primarily for a dwelling and contains one
to four dwelling units.
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to four dwelling units.
(21) SALESPERSON. Any person licensed as a real estate
salesperson under Articles 1 and 2 of this chapter.
(18)(22) 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
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, or its own
real estate or the real estate of his or her spouse, child, or
parent. This exception does not apply to real estate
wholesaling unless the sale is to a spouse, child, or parent,
or unless the property is in a predevelopment stage.
(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.
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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.
(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 or entity that engages in real estate
wholesaling, unless the sale is to a spouse, child, or parent,
or unless the property is in a predevelopment stage. "
"§34-27-30
It shall be unlawful for any person, sole
proprietorship, partnership, corporation, branch office, or
lawfully constituted business organization, as the Legislature
may from time to time provide, for a fee, commission, or other
valuable consideration, or with the intention or expectation
of receiving or collecting a fee, commission, or other
valuable consideration from another, to do any of the
following unless licensed under Articles 1 and 2 of this
chapter:
(1) Sell, exchange, purchase, rent, or lease real
estate situated within the State of Alabama.
(2) Offer to sell, exchange, purchase, rent, or lease
real estate situated within the State of Alabama.
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real estate situated within the State of Alabama.
(3) Negotiate or attempt to negotiate the listing,
sale, exchange, purchase, rental, or leasing of real estate
situated within the State of Alabama.
(4) List or offer or attempt or agree to list real
estate for sale, rental, lease, exchange, or trade situated
within the State of Alabama.
(5) Auction, offer, or attempt or agree to auction ,
real estate situated within the State of Alabama.
(6) Buy or sell or offer to buy or sell, or otherwise
deal in options on real estate situated within the State of
Alabama.
(7) Aid, attempt, or offer to aid in locating or
obtaining for purchase, rent, or lease any real estate
situated within the State of Alabama.
(8) Procure or assist in procuring of prospects for the
purpose of effecting the sale, exchange, lease, or rental of
real estate situated within the State of Alabama.
(9) Procure or assist in the procuring of properties
for the purpose of effecting the sale, exchange, lease, or
rental of real estate situated within the State of Alabama.
(10) Present himself or herself, or be presented, as
being able to perform an act for which a license is required.
(11) Real estate wholesaling. "
"§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
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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
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
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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
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
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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
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.
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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
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.
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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 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
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
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(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 the licensee's
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
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 the licensee's or its 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 engaging in real estate wholesaling, failing
to provide the required buyer and seller disclosures pursuant
to Section 8-42-2.
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to Section 8-42-2.
(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
the Attorney General or the Alabama Securities Commission , 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
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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
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. ; or
d. In matters involving real estate wholesaling, refer
the matter to the Alabama Securities Commission for
investigation and adjudication.
(3) Any fine or fines imposed by this subsection that
are not paid as ordered shall be enforceable in any court of
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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
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. Sections 8-42-1.1, 8-42-1.2, 8-42-1.3, and
8-42-4, are added to the Code of Alabama 1975, to read as
follows:
§8-42-1.1
For purposes of this chapter the following terms have
the following meanings:
(1) CLOSING. The transfer of legal title to real
property from a property owner to another person or entity
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property from a property owner to another person or entity
through the delivery of a deed or other instrument of
conveyance for consideration.
(2) COMMISSION. The Alabama Securities Commission.
(3) CONTACT. Any communication delivered by mail,
courier, email, text message, social media message, telephone
call, voicemail, prerecorded message, or similar method.
(4) 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.
(5) INVESTMENT-ORIENTED REAL PROPERTY SOLICITATION. Any
communication, offer, agreement, or transaction involving real
property in which the expected economic benefit to the
offeror, directly or indirectly, is derived primarily from
resale, assignment, appreciation, fee extraction, or
contractual arbitrage, rather than occupancy or personal use
by the offeror.
(6) OFFEREE. A real property owner who receives a
purchase offer.
(7) OFFEROR. A person or entity acting directly or
indirectly on behalf of another who makes an offer to purchase
real property.
(8) REAL ESTATE WHOLESALING. The practice of assigning
or marketing the assignment of an equitable interest in
residential property for profit.
(9) RECORDING. Presenting a document to a county judge
of probate for official placement in the public land records.
(10) RESIDENTIAL REAL ESTATE. Real property located in
this state which is used primarily for a dwelling and contains
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this state which is used primarily for a dwelling and contains
one to four dwelling units.
(11) SELLER. An offeree who signs a purchase contract.
(12) SERVICE AGREEMENT. A contract under which a person
agrees to provide services in connection with the purchase or
sale of residential real estate.
(13) SERVICE PROVIDER. An individual or entity that
provides services to another party under a service agreement.
(14) UNFAIR SERVICE AGREEMENT. A service agreement in
which the services subject to the agreement are not performed
within one year after the date upon which the agreement
commences and provides any of the following:
a. Purports to run with the land or to be binding on
future owners of interests in the real property.
b. Allows for assignment of the right to provide the
service without notice and agreement of the owner of
residential real estate.
c. Purports to create a lien, encumbrance, or other
real property security interest.
(15) UNSOLICITED COMMUNICATION. Any communication sent
to a real property owner when the owner has not requested or
invited the contact, given prior consent to be contacted, or
entered into a written agreement with the sender concerning
the property.
§8-42-1.2
(a) The commission shall have authority under this
chapter to administer, implement, and enforce all regulated
conduct, individuals, and entities in this chapter, along with
issuing licenses for these activities. This authority extends
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issuing licenses for these activities. This authority extends
to regulating investment-oriented real estate solicitations,
recorded service agreements, unfair service agreements,
unsolicited offers, and related practices. This exclusive
authority applies regardless of any license an individual or
entity may hold under any other legal provision. The Alabama
Real Estate Commission shall have concurrent authority with
the commission to regulate assignments or offerings of
assignments of equitable interests. This authority shall not
preclude the Board of Commissioners of the Alabama State Bar
from pursuing professional licensing violations under Chapter
3 of Title 34.
(b) The commission may adopt rules necessary to carry
out this chapter, including, but not limited to, rules
governing:
(1) Consumer complaint intake and resolution
procedures;
(2) Establishment of a consumer complaint hotline that
allows consumers to verify the licenses of regulated entities
under this chapter.
(2) Disclosure forms and content;
(3) Examination, reporting, and recordkeeping
requirements;
(4) Other than real estate wholesaling, which is
licensed by the Alabama Real Estate Commission, any licensing,
permitting, or registration program and fees established by
rule;
(5) Any renewal, suspension, or revocation program
established by rule;
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established by rule;
(6) Penalty schedules and remedial measures;
(7) Defining additional unfair, deceptive, or abusive
practices; or
(8) Definitions and standards necessary to preclude
circumvention of this chapter.
(c) The commission may:
(1) Conduct investigations and examinations;
(2) Require the production of documents and testimony;
(3) Issue subpoenas;
(4) Issue cease and desist orders;
(5) Suspend, revoke, or condition any license, permit,
or registration established by rule;
(6) Impose administrative fines and penalties for each
violation;
(7) Order restitution, rescission, disgorgement, or
other remedial relief;
(8) Prosecute criminal violations where authorized by
law; or
(9) Coordinate with other agencies as authorized by
law.
(d) The commission may bring an action in any court of
appropriate jurisdiction for:
(1) Injunctive or other relief;
(2) Civil penalties;
(3) Restitution, rescission, or disgorgement;
(4) Enforcement of administrative orders;
(5) Recovery of investigative and enforcement costs; or
(6) Appointment of a receiver.
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(6) Appointment of a receiver.
(e) Nothing in this chapter shall be construed to limit
criminal prosecution under any provision of law or to require
exhaustion of administrative remedies before criminal
enforcement.
(f) Enforcement under this chapter shall be in addition
to, not in lieu of, remedies available under the Deceptive
Trade Practices Act.
(g) Any contractual provision attempting to waive
rights, remedies, or protections under this chapter is void
and unenforceable as against public policy.
(h) The authority granted under this chapter applies to
individual violations as well as to patterns or practices of
conduct, whether arising under a single section or multiple
sections of this chapter.
(i) The existence or nonexistence of an enforcement
action by the commission or other governmental agency pursuant
to this section shall not bar or diminish any private right of
action.
§8-42-1.3
(a) The commission may impose administrative fines and
penalties per violation. The civil penalty shall not exceed
one hundred thousand dollars ($100,000) per violation,
provided that the aggregate civil penalty assessed in a single
administrative order shall not exceed ten million dollars
($10,000,000). Each day an act, omission, or violation
continues shall constitute a separate violation.
(b) In determining the amount of any civil penalty, the
commission shall consider all relevant factors, including:
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commission shall consider all relevant factors, including:
(1) The nature, gravity, and duration of the violation,
including any irreparable harm or risk of harm to property
owners;
(2) The degree of culpability, intent, or recklessness
demonstrated by the violator;
(3) The facts, circumstances, and conduct in connection
with the investment-oriented real estate activity at issue;
(4) The economic benefit, compensation, or other
financial gain obtained, directly or indirectly, as a result
of the violation;
(5) Any prior history of violations of this chapter,
the Alabama Securities Act, or related consumer protection
laws; and
(6) The violator's ability to pay the assessed penalty.
(c) In any action or administrative proceeding arising
from an unsolicited contract, the following factors may be
considered in determining whether the transaction was unfair
or deceptive, without automatically creating a right of
rescission:
(1) The age of the victim.
(2) Whether any offer to purchase is below the real
property's most recent tax assessed value.
(3) Whether the victim received the professional
assistance of a licensed real estate agent, as defined in
Chapter 27 of Title 34, or a licensed attorney, as defined in
Chapter 3 of Title 34.
(d) Civil penalties under this section may be assessed
for any violation occurring within five years after the
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for any violation occurring within five years after the
discovery of the fraud.
§8-42-4
(a) This section shall govern every unsolicited
electronic, telephonic, or video communication, or written
inquiry, solicitation, or mailing by any individual or entity,
whether acting as a principal, investor, intermediary, or
agent, that makes an investment-oriented real property
solicitation and that expresses an interest in any of the
following:
(1) Buying real property or an option to buy real
property from the addressee.
(2) Buying the real property to which the written
inquiry or mailing is addressed.
(3) Offering services relating to the sale of real
estate.
(b)(1) Any unsolicited communication or solicitation
governed by this section that constitutes an
investment-oriented real property solicitation by any
individual or entity that expresses an interest in: (i) buying
real property or an option to buy real property from the
addressee; (ii) buying the real property to which such written
inquiry or mailing is addressed; or (iii) offering services
relating to the sale of real estate, shall include consumer
protection disclosures as required by the commission.
(2) The Commission shall, pursuant to its rulemaking
authority and in accordance with the Alabama Administrative
Procedures Act, establish standard disclosure language for
consumer protection that shall be included in any
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consumer protection that shall be included in any
investment-oriented, unsolicited real estate offers as defined
in this chapter. The disclosures shall include:
a. Notice that the offer may be below fair market
value;
b. A statement encouraging the real property owner to
seek guidance from a licensed real estate agent or attorney of
the owner's choice;
c. A statement that the owner has no obligation or duty
to respond to the solicitation; and
d. Contact information for the commission and a
statement that the owner may verify the identity,
registration, licensure status, and legitimacy of the offeror
through the commission.
(3) Enforcement of violations of this subsection shall
be carried out in accordance with Section 8-42-1.2.
(c) A seller may rescind a contract to sell real
property entered into as a result of an unsolicited offer
within seven days after the contract is executed and before
closing if the seller did not receive the professional
assistance of a licensed real estate agent, as defined in
Chapter 27 of Title 34, or a licensed attorney, as defined in
Chapter 3 of Title 34. The seller shall have the right to a
seven-day rescission period starting from the date the
contract is signed until the closing date. Parties may agree
to extend this rescission right up to one day before closing,
but the extension must be agreed upon in writing and included
in the contract. A rescission must expire at least one day
prior to closing, providing a minimum of eight days between
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prior to closing, providing a minimum of eight days between
the contract being signed and the closing.
(d) A seller who uses the professional assistance of a
licensed real estate agent or a licensed attorney of the
seller's choosing when the contract is signed does not have a
right to rescind the contract unless agreed to by the parties
and written in the contract. In no instance shall a right to
rescind be extended beyond the closing date. This section
shall be interpreted to protect the seller and to ensure the
transaction's finality at closing.
(e) If the seller meets the criteria in subsection (c)
and rescinds the contract within the seven-day period:
(1) The seller owes no penalty, fee, or damages;
(2) Any contractual penalty provision is void; and
(3) Any funds received shall be returned within seven
days after cancellation.
(f)(1) If real property meets the criteria in
subsection (c), then it may not close prior to the expiration
of the seven-day cancellation period. No deed, assignment,
memorandum, lien, option, encumbrance, or other instrument
conveying or affecting an interest in real property may be
delivered, assigned, transferred, or recorded during a
seven-day cancellation period. This includes:
a. Assignment of the purchase contract;
b. Double closings; and
c. Conveyance to a third party.
(2) Any instrument executed or recorded in violation of
this subsection is voidable at the election of the seller.
(3) Any third party acquiring an interest during the
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(3) Any third party acquiring an interest during the
seven-day period takes subject to the seller's statutory right
to rescission.
(g) Violations of this section shall be enforced in
accordance with Section 8-42-1.2.
(h) This chapter does not apply to properties that are:
(i) subject to an active written listing agreement with a
licensed real estate broker; (ii) marketed for sale by the
property owner or to an individual attempting to acquire an
interest in real estate from another person with whom he or
she has an existing business or personal relationship; or
(iii) where the property interest being acquired is for the
purchaser's personal use or benefit.
Section 3. This act shall become effective on October
1, 2026.
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1, 2026.
House of Representatives
Read for the first time and referred
to the House of Representatives
committee on Boards, Agencies and
Commissions
................05-Mar-26
Read for the second time and placed
on the calendar:
1 amendment
................17-Mar-26
Read for the third time and passed
as amended
Yeas 82
Nays 14
Abstains 7
................19-Mar-26
John Treadwell
Clerk
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