Alabama Real Estate Broker Exam — All Questions

An Alabama buyer's agent offers to rebate $1,500 of her commission to the buyer at closing. Under Alabama license law this is:

• a.Permitted if the seller and the lender both consent in writing
• b.Permitted if the rebate appears on the closing statement
• c.Prohibited; Alabama forbids paying or receiving any rebate✓
• d.Permitted if the buyer's qualifying broker approves it in writing

The prohibited-acts list in Section 34-27-36 is flat on this point: "paying or receiving any rebate from any person in a real estate transaction." There is no consent exception, no disclosure exception and no broker-approval exception written into it, which is what makes Alabama different from the many states where a disclosed commission rebate is an ordinary marketing tool — a licensee moving here from one of those states is the classic person to get this wrong. Be careful not to over-read it into a ban on ordinary compensation: the same section expressly permits paying or dividing compensation with a licensee or a multiple listing service, and permits an associate broker or salesperson to own a lawfully constituted business organization, including a corporation or limited liability company, for the purpose of receiving those payments, provided that entity is not licensed and does not engage in any other activity requiring a real estate license.

An unlicensed neighbor sends an Alabama broker a buyer who closes, and the broker wants to thank him with $500 out of the commission. Under Section 34-27-36 the broker may:

• a.Pay him, provided the total stays under $600 in a calendar year
• b.Pay him, provided the payment is shown on the closing statement
• c.Not pay him; compensation may go only to a licensee or an MLS✓
• d.Pay him, provided the buyer consents to the payment in writing

The subdivision forbids "paying any profit, compensation, commission, or fee to, or dividing any profit, compensation, commission, or fee with, anyone other than a licensee or multiple listing service." The permitted recipients are named, the neighbor is not among them, and neither disclosure on the closing statement nor the buyer's blessing adds him to the list; the $600 threshold belongs to federal tax reporting and has nothing to do with this chapter. The same subdivision carves out one thing and one only: an associate broker or salesperson may own a lawfully constituted business organization, including a corporation or limited liability company, "for the purpose of receiving payments contemplated in this subsection," and that organization is not required to be licensed and "shall not engage in any other activity requiring a real estate license." Looking the other way down the same chain, it is a prohibited act for a salesperson or associate broker to accept "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" — Act 2025-380 added the words "or company" there. And establishing an association, by employment or otherwise, with an unlicensed person who is expected or required to act as a licensee is prohibited outright.

An Alabama broker is served with a civil summons and complaint alleging fraud in a listing she handled. What does the license law require of her?

• a.Notify the commission by certified mail within 30 days, with a copy of the complaint
• b.Notify the commission by certified mail within 10 days, with a copy of the complaint✓
• c.Notify the commission only if the case ends in a judgment against her
• d.Notify her qualifying broker, who reports the matter at the next renewal

Section 34-27-31(j) puts the duty on the licensee, sets a short clock and specifies the delivery: "Each licensee shall notify the commission within 10 days after notice to him or her of the institution of any criminal prosecution against him or her, or of a civil summons and complaint against him or her, if the subject matter of the civil complaint involves a real estate transaction or involves the goodwill of an existing real estate business. The notification shall be in writing by certified mail and shall include a copy of the summons and complaint." Thirty days is not the figure. Waiting for the outcome fails the section twice over, because subsection (k) imposes a second 10-day report at the far end — after notice that a criminal verdict has been rendered, that a criminal action has been dismissed, or that the civil action has resulted in a judgment or been dismissed. Telling only the qualifying broker satisfies nothing, since the statute names the commission as the recipient and the licensee as the reporter. The commission wants both ends of the case because the outcome is independently actionable: Section 34-27-36 makes "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" a ground for discipline in its own right.

To move the last four lots in a subdivision, an Alabama broker advertises that every buyer who signs this month is entered in a drawing for a free lot. This is:

• a.A prohibited lottery under Alabama's license law✓
• b.Permitted if the odds of winning are disclosed in the advertising
• c.Permitted if an auctioneer runs the drawing
• d.Permitted if the drawing is registered with the commission

Section 34-27-36 makes it a prohibited act to be "offering free lots or conducting lotteries for the purpose of influencing a party to purchase or lease real estate." Both halves are in play here: a free lot is being offered and a drawing is being conducted, and the element that completes the violation — purpose — is stated in the advertisement itself, which exists to influence people to buy. There is no registration procedure that legitimizes such a drawing, no disclosure of odds that cures it, and no significance to who spins the drum; an auctioneer conducting the drawing changes the mechanics rather than the purpose. Note how narrow the prohibition is on its own terms — it is aimed at chance-based inducements to buy or lease real estate, not at ordinary advertising expense — but a licensee who runs one is also exposed to the broader prohibited act of publishing an advertisement "which deceives or which is likely to deceive the public, or which in any manner tends to create a misleading impression."

An Alabama licensee has a seller sign a listing agreement and a buyer sign a purchase contract. What must the licensee do with the copies?

• a.Keep the copies in the office file until the commission asks for them
• b.Furnish a copy to each party who signed, but only on written request
• c.Furnish copies to the parties at closing, when the file is assembled
• d.Furnish a copy to each party who signed, promptly and unasked✓

Section 34-27-36 makes it a prohibited act to fail "to voluntarily furnish a copy of each listing, contract, lease, and other document to each party executing the document with reasonable promptness." Two words carry the rule. Voluntarily disposes of the request condition — the duty does not wait to be triggered, and a party who does not know to ask is the person it protects. Promptness disposes of the closing-table answer, because the point of holding your own copy is to be able to read it while the deal is still moving. Filing the copies away for the commission confuses this duty with the separate retention duty, which requires a qualifying broker to keep contracts, leases and listings for three years, and with the further prohibited act of failing or refusing on demand to produce a document, book or record for commission inspection. A third document provision covers papers that were never the licensee's to begin with: failing without cause to surrender to the rightful owner, on demand, a document or instrument coming into his or her possession.

An Alabama seller instructs the listing licensee not to bring him any offer below $300,000. A written offer arrives at $282,000. What must the licensee do?

• a.Reject the offer, because the seller's instruction is lawful and binding
• b.Counter at $300,000 on the seller's behalf without mentioning the offer
• c.Hold the offer until a higher one arrives
• d.Present the offer, because all written offers must be presented✓

Section 34-27-84(a)(5) obliges every licensee, "when assisting a party in the negotiation of a real estate transaction, to present all written offers in a timely and truthful manner," and Section 34-27-84 states these as obligations "to all parties in a real estate transaction," not only to clients. Subsection (c) is more specific still on a listing: "When accepting an agreement to list an owner's property for sale, the licensee shall, at a minimum, accept delivery of and present to the consumer all offers, counteroffers, and addenda to assist the consumer in negotiating offers, counteroffers, and addenda, and to answer the consumer's questions relating to the transaction." A client's instructions do bind a licensee, but only so far: Section 34-27-85(a)(3) requires the licensee to follow "any lawful instructions of the client that are within the scope of the agency agreement, that are not inconsistent with other duties as enumerated in this article," and screening out written offers is inconsistent with the duty to present them. Countering without telling the seller substitutes the licensee's judgment for the client's, and holding the offer to shop it fails the word "timely." Note the paperwork that travels with a presentation: Rule 790-X-3-.04 requires a complete estimated closing statement, acknowledged by dated signature, each time the licensee presents or prepares a written offer or counteroffer, and Section 34-27-36 makes it a prohibited act to fail to inform the buyer or seller at the time an offer is presented that certain closing costs will be owed and their approximate amount.