The Alabama Real Estate Recovery Fund
The Recovery Fund is a limited, last-resort remedy that protects consumers from uncompensated licensee misconduct. This chapter covers its purpose, its effect on the licensee, and its limits.
Purpose
The Recovery Fund reimburses members of the public who suffer an actual monetary loss caused by a licensee's fraud, misrepresentation, deceit, or conversion of trust funds and who cannot collect a final court judgment from the licensee. It is not a lending program, an operating budget, or a means to resolve commission disputes between licensees.
Effect on the Licensee
When the fund pays a claim on a licensee's behalf, that licensee's license is suspended or revoked until the fund is repaid in full with interest. This repayment-with-interest rule replenishes the fund and deters the misconduct that triggers claims.
Limits on Recovery
Recovery is capped per transaction and in the aggregate per licensee, and the consumer must first obtain and be unable to collect a court judgment against the licensee. The fund covers consumer losses from licensee fraud, not ordinary business risk or disputes where no licensee misconduct occurred.