Alabama Real Estate Broker Exam — All Questions

A new environmental ordinance leaves a landowner with no economically viable use of a parcel, although the government takes no title to it. The owner's strongest constitutional claim is:

• a.The ordinance is void because zoning cannot restrict use
• b.A regulatory taking entitling the owner to payment✓
• c.Escheat has occurred and the state now owns the parcel
• d.Spot zoning, since only this parcel lost its value

Regulation that goes so far it denies an owner all economically viable use is treated as a regulatory taking, and just compensation is owed even though the government never took title. Arguing that zoning simply cannot restrict use fails, because regulating land is a valid exercise of the police power and owners have no right to the most profitable use. Escheat moves property to the state only when an owner dies with no will and no heirs, which has nothing to do with an ordinance. Spot zoning describes singling out one parcel for a different classification, not a general environmental rule applied to a class of land.

Reviewing a title report, a broker finds an old recorded covenant, written decades ago, that bars resale of the lot to members of a specified race. Its legal effect today is:

• a.It binds the buyer because it was recorded before purchase
• b.It is void, so a court will never enforce it or enjoin it✓
• c.It stays valid until the homeowners association removes it
• d.It is enforceable by the association but not by an owner

A private restriction that discriminates on a protected basis is void and unenforceable under the federal Fair Housing Act and the Civil Rights Act of 1866, so no court will order compliance or enjoin a violation, and the association has no power the courts would back. Recording rescues nothing, because an illegal restriction gains no force from sitting in the public record. No association vote is required to strip it of effect, although many states let an owner have the language formally struck. Valid CC&Rs, by contrast, are enforced privately by injunction brought by an owner or the association. A broker must never repeat or give effect to such language.

A grantor signs and notarizes a deed naming a nephew as grantee, locks it in a safe deposit box, and tells no one. The grantor later dies. What is the deed's effect?

• a.Title passed when the grantor signed the deed
• b.Title passed because the deed was acknowledged
• c.No title passed, because delivery never occurred✓
• d.Title passes when the estate later records it

A deed operates only when the grantor delivers it with the present intent to pass title and the grantee accepts, and both must happen while the grantor is alive. Signing accomplishes nothing while the instrument stays under the grantor's control in a box no one knows about. Acknowledgment before a notary serves recording, not validity, so notarizing it changes nothing here. An estate representative cannot supply the delivery the grantor failed to make, and recording an undelivered deed does not revive it. The nephew takes only through the will or the intestacy statute, which is why closings hand over the executed deed rather than merely signing it.

A deed is signed by a competent grantor and handed to a grantee who accepts it, but the grantor's signature was never notarized. As between those two parties, the deed is:

• a.Void, since notarizing is a validity requirement
• b.Valid, though it cannot be recorded as it stands✓
• c.Valid only if the grantee later pays a recording fee
• d.Voidable at the option of the grantor's creditors

Acknowledgment is a recording requirement, not an element of a valid deed. Delivered and accepted, the deed transfers title between grantor and grantee even with no notary, but the recorder will reject it, leaving the grantee exposed to later purchasers and lienholders who record first. Calling it void confuses the two ideas: validity turns on a competent grantor, an identifiable grantee, words of conveyance, an adequate legal description, the grantor's signature, and delivery and acceptance. Paying a fee cannot cure a missing acknowledgment, because the recorder cannot accept the instrument at all. Creditors of the grantor gain no power to undo a completed conveyance.

In a deed, which clause opens with the words 'to have and to hold' and defines the extent of the estate the grantee is receiving?

• a.The granting clause containing the words of conveyance
• b.The habendum clause, following the granting clause✓
• c.The acknowledgment taken before a notary public officer
• d.The legal description identifying the land conveyed

The habendum clause follows the granting clause, begins with the traditional phrase 'to have and to hold,' and spells out the estate conveyed, for example a fee simple absolute or a life estate. The granting clause holds the words of conveyance that actually transfer the interest and names the grantee. The acknowledgment is the notary's certificate that the signature is genuine, which the recorder requires but the transfer does not. The legal description identifies the land by metes and bounds, lot and block, or government survey, and it fixes what is conveyed rather than how much of an estate. Reading both clauses tells a broker exactly what the buyer is getting.

A relocation company that has owned a home for three months conveys it, warranting title only against defects that arose during its own ownership. The deed it delivers is a:

• a.Bargain and sale deed implying ownership without covenants
• b.General warranty deed covering the entire chain of title
• c.Quitclaim deed conveying only the interest actually held
• d.Special (limited) warranty deed covering the grantor's period✓

Warranting only against defects created or suffered while the grantor held title describes the special or limited warranty deed, the customary instrument for corporate, relocation, and fiduciary sellers who cannot vouch for what earlier owners did. A general warranty deed reaches back through the whole history of the property and offers the broadest protection, which is more than this seller is giving. A quitclaim carries no warranties at all and passes only whatever interest the signer happens to hold. A bargain and sale deed implies that the grantor owns the property but adds few or no covenants. A buyer taking narrower covenants should lean on an owner's title policy.

A title search shows that a seller's former spouse may still hold a possible interest in the property. What is the usual instrument used to release that interest and clear the record?

• a.A quitclaim deed from the former spouse✓
• b.A general warranty deed from the former spouse
• c.A trustee's deed issued after a foreclosure
• d.A correction deed fixing the legal description

A quitclaim releases whatever interest the signer may hold, with no warranties attached, which makes it the standard tool for removing a cloud such as a possible marital interest, a stale easement claim, or a name discrepancy. Demanding a general warranty deed asks the former spouse to guarantee title he or she may never have owned, and it is normally refused. A trustee's deed is what the trustee under a deed of trust issues to the purchaser at a foreclosure sale. A correction deed reforms a mistake in an earlier deed between the same parties and cannot release an outsider's claim.

A court-appointed personal representative sells a decedent's home during probate, and the buyer's broker asks what instrument will convey title. The answer is:

• a.A trustee's deed given after a nonjudicial foreclosure
• b.A sheriff's deed issued following a judicial sale
• c.A general warranty deed with full title covenants
• d.An executor's or personal representative's deed✓

Estate property is conveyed by an executor's deed when a will names the executor, or by a personal representative's or administrator's deed when the court makes the appointment; these deeds recite the court authority and give only limited covenants. A trustee's deed comes from the trustee under a deed of trust after a nonjudicial foreclosure sale. A sheriff's deed, called a referee's deed in some states, follows a judicial sale ordered by a court. A general warranty deed is not used, because a fiduciary will not personally guarantee title against the acts of the decedent or of owners further back in the chain.

After closing under a general warranty deed, a buyer discovers a recorded utility easement that the deed never disclosed. Which covenant did the grantor breach?

• a.Quiet enjoyment, a promise against eviction by better title
• b.Seisin, a promise that the grantor owns the estate conveyed
• c.Against encumbrances, a promise of no undisclosed burdens✓
• d.Further assurance, a promise to sign curative papers

The covenant against encumbrances promises that no liens, easements, or similar burdens exist beyond those the deed discloses, so a recorded easement left unmentioned breaches it at the moment of delivery. Seisin promises the grantor actually owns the estate being conveyed, which is not the trouble when ownership is sound but burdened. Quiet enjoyment shields the grantee from later eviction by someone holding superior title, and an easement holder's use is not an eviction. Further assurance obliges the grantor to sign additional documents needed to perfect title. A general warranty deed carries all of these along with the right to convey and warranty forever.

A neighbor has openly farmed and fenced a strip of an absentee owner's land, excluding others and never asking permission. To take title by adverse possession the neighbor must prove:

• a.Payment of the owner's property taxes for every year
• b.Open, notorious, continuous, hostile, and exclusive possession✓
• c.A written agreement signed by the record title owner
• d.A recorded deed describing the disputed strip of land

Adverse possession requires possession that is open and notorious, continuous, hostile in the sense of being without permission, and exclusive, held for the statutory period set by state law. Some states add payment of taxes or color of title, but those elements are not universal, so a broker should never assume them from another state's rule. A written agreement from the record owner would destroy the claim outright, since permission defeats hostility. Recording a deed creates no possession and cannot manufacture the required years of use. Adverse possession is one form of involuntary alienation, alongside descent, escheat, foreclosure, eminent domain, and accretion.

An owner dies leaving no will, and after a diligent search no heirs can be located. A broker asked to list the property should understand that title:

• a.Passes by devise to the beneficiaries named in a will
• b.Descends to the decedent's nearest surviving creditors
• c.Vests permanently in the administrator the court appoints
• d.Escheats to the state, an involuntary transfer of title✓

Escheat is the state's claim to property when an owner dies intestate and no heirs can be found, and it is a classic involuntary transfer rather than a voluntary one by deed or will. Devise is a gift of real property by will, so it cannot operate where there is no will and no named beneficiary. Descent carries property to heirs under the intestacy statute, but creditors are paid as claimants out of the estate and never inherit the land itself. An administrator has authority to manage and convey estate property during probate, not to own it permanently. Each state sets its own escheat procedure and waiting period.

A search reveals an old mortgage of record that was paid off but never released, and the lender no longer exists. Which step clears that cloud so title is marketable?

• a.Ordering an abstract of title with an attorney's opinion
• b.Buying an owner's title policy that insures over it
• c.Filing a quiet title action asking a court to clear it✓
• d.Recording a correction deed signed by the current seller

A quiet title action asks a court to determine ownership and extinguish a stale or unreleasable claim, which is the practical cure when the mortgagee has vanished and no release can be obtained. An abstract of title with an attorney's opinion summarizes and evaluates the recorded chain; it reports the cloud rather than removing it, and it offers no indemnity. An owner's policy may insure over a known risk, but insurance pays for loss and leaves the defect on the record for the next buyer to confront. A correction deed fixes a drafting error between the original parties and cannot release a third party's lien.

A seller deeds a parcel to one buyer and later deeds the same parcel to a second buyer, who records first. Which framework decides who owns the land?

• a.A federal recording statute applied in all fifty states
• b.The state's recording act, race, notice, or race-notice✓
• c.The order in which the two deeds were signed and dated
• d.The county recorder's discretion over competing claims

Priority between competing grantees is governed by the recording act of the state where the land lies, and the schemes differ: a pure race state protects whoever records first, a notice state protects a later purchaser who took without notice of the earlier deed, and a race-notice state protects one who took without notice and recorded first. No federal statute governs land recording. Signing dates do not decide the contest, which is precisely why a public recording system exists. Recorders act ministerially and have no power to resolve claims. Because the gap between closing and recording is the danger zone, a broker should press for prompt recording.

A buyer pays for a lender's title policy at closing and asks the broker whether it also protects the buyer's equity in the home. The correct answer is that the policy:

• a.Protects both parties equally up to the full purchase price
• b.Protects the buyer once the mortgage has been fully repaid
• c.Protects the buyer against defects arising after closing
• d.Protects only the lender, declining with the balance✓

A lender's, or mortgagee's, policy insures only the lender's security interest, and its coverage shrinks as the principal is paid down, ending altogether when the loan is satisfied. It never covers the buyer's equity, which is why a separate owner's policy is offered at closing for a one-time premium and lasts as long as the insured holds an interest. Repaying the mortgage does not convert the lender's coverage into the buyer's; it extinguishes it. And no title policy insures defects that first arise after its date. Brokers should explain this plainly before a buyer waives owner's coverage to save money.

Six months after closing, a contractor the buyer hired records a mechanic's lien against the home. The buyer files a claim under the owner's title policy. The insurer will most likely:

• a.Deny, because the defect arose after the policy was issued✓
• b.Pay, because owner's policies cover all future liens
• c.Pay, because the standard exceptions were removed
• d.Deny, because only a lender may file a title claim

Title insurance looks backward: it covers defects that already existed when the policy was issued but were not discovered or excepted, not events that happen later. A lien for work the buyer ordered after closing is a new problem the buyer must resolve directly. Buying extended coverage removes standard exceptions and broadens what is insured as of the policy date, but it does not push coverage forward in time. Owners plainly may claim under their own policies; the lender's policy is the one limited to the lender. Extended coverage typically depends on a current survey, which reveals encroachments and boundary issues a records search alone cannot.

A buyer tours a house and finds an occupant who is not the seller living there under an unrecorded lease. What kind of notice does that occupancy give the buyer?

• a.Actual notice, given by the seller's written disclosure
• b.Constructive notice, given by the public record
• c.No notice at all, since the lease was not recorded
• d.Inquiry notice, requiring the buyer to ask about it✓

Someone in possession who is not the seller puts a buyer on inquiry notice: the buyer is charged with whatever a reasonable investigation of that occupancy would have turned up, including an unrecorded lease or an option to purchase. Actual notice is what a party genuinely knows, typically from a disclosure or a conversation, and no one has told this buyer anything. Constructive notice comes from the public record, which by definition cannot reveal an unrecorded lease. Treating an unrecorded interest as invisible is the classic error, because possession is itself notice. A broker should always ask who occupies a property and on what terms.

An Alabama broker's unlicensed office assistant answers the phone, orders signs and lockboxes, and types advertising copy. Which additional task would require that assistant to hold a license?

• a.Ordering a lockbox and a yard sign for a new listing
• b.Mailing a signed copy of a contract out to the parties
• c.Physically showing a listed property to a prospective buyer✓
• d.Typing the licensee's advertising copy for a newspaper ad

Section 34-27-2(b)(6) exempts from licensing "persons performing general clerical or administrative duties for a broker so long as the person does not physically show listed property," and Rule 790-X-1-.04 spells out the same line from the other side: no clerical or office employee "shall physically show listed property, solicit or accept listings, negotiate sales or leases, hold himself out as engaged in the real estate business or perform any other act for which a license is required unless properly licensed." Walking a buyer through the house is the one item on this list that crosses that line, and it ends the exemption for everything the assistant does. Ordering a lockbox and a sign, mailing signed copies to the parties, and typing advertising copy are the ordinary clerical and administrative support the exemption was written to allow, because none of them puts the assistant in front of a consumer performing an act for which Section 34-27-30 requires a license. Qualifying brokers are the ones held to this: Rule 790-X-3-.15(2) makes allowing an unlicensed person to engage in activities requiring a license a failure of broker supervision.

An Alabama qualifying broker enters a co-brokerage agreement with a principal broker licensed in another state. Under Section 34-27-3 as amended in 2025, how much Alabama business may that out-of-state broker do under co-brokerage agreements in one calendar year?

• a.Three transactions✓
• b.One transaction
• c.Ten transactions
• d.Any number of transactions

Act 2025-380 added a hard ceiling that did not exist before: "A co-brokerage agreement is limited to three transactions per calendar year, per licensed out-of-state principal broker. A transaction may include multiple properties if the properties are part of the same portfolio." A companion limit in the same section forbids the out-of-state principal broker to use co-brokerage agreements for Alabama transactions "totaling more than fifty million dollars ($50,000,000) in any calendar year," so there are two ceilings running at once and neither is unlimited. One transaction understates the allowance and would make the portfolio sentence meaningless. Ten is not a figure the section uses. The Alabama qualifying broker carries the paperwork and the risk: the agreement must be in writing and specify each parcel covered, a copy must be filed with the commission not more than 10 days after all parties sign, the Alabama broker must supervise the showing of Alabama property and any subsequent negotiations, the Alabama broker's name must appear in all advertising of the property, and any earnest money must be held in escrow by the Alabama qualifying broker unless both buyer and seller agree in writing to relieve him of it.

An applicant who holds no real estate license in another state applies for an Alabama broker license. Along with the application, what must the applicant prove?

• a.An active salesperson license in any state for 24 of the preceding 36 months, plus a 60-clock-hour course✓
• b.An active salesperson license in Alabama for 12 of the preceding 24 months, plus a 30-clock-hour course
• c.An active salesperson license in any state for 60 of the preceding 72 months, plus 15 hours of continuing education
• d.An active salesperson license in Alabama for six of the preceding 12 months, plus a college degree in real estate

Section 34-27-32 sets out what a broker applicant files: "(1) Proof that he or she has had an active real estate salesperson license in any state for at least 24 months of the 36-month period immediately preceding the date of application. (2) Proof that he or she is a high school graduate or the equivalent. (3) Proof that he or she has completed a course in real estate approved by the commission, which shall be a minimum of 60 clock hours." Both the experience and the education must be there, which is what makes the broker license a tier above the salesperson license. Twelve of 24 months paired with the 30-hour course confuses the broker gate with the post-license course a new salesperson takes to convert a temporary license. Five years of licensure with continuing education instead of the broker course fails the education half no matter how many years are stacked up, and 15 hours is the renewal requirement rather than a qualification. A college degree, whatever else it is worth, is not the commission-approved course the statute names. One wording difference is worth knowing: the Pearson VUE handbook describes the requirement as "an active real estate license in any state," while the statute says an active real estate salesperson license. Handbook #093300 also gives broker applicants six months after completing the course to pass the examination.

Alabama's license period ends September 30. An Alabama broker files the renewal form and fees on September 12 of that final year. What happens?

• a.The license is placed on inactive status on October 1 and must be reactivated
• b.The license renews on payment of the renewal fee plus a $150 penalty✓
• c.The license renews on payment of the ordinary renewal fee, with no penalty owed
• d.The license lapses on October 1 and the broker must qualify as a new applicant

Section 34-27-35(g) sets two different dates and a price for the gap between them. The renewal form and fees "shall be filed on or before August 31 of the final year of each license period in order for the respective license to be renewed on a timely basis," and if they are filed "during the period from September 1 through September 30 of the final year of a license period, the one hundred fifty dollar ($150) penalty set out below shall be paid in addition to the renewal fees." September 12 is inside that window, so the license renews and the penalty is owed. It is not penalty-free, because August 31 rather than September 30 is the on-time date. It does not go inactive, because that consequence attaches only to "failure to meet this September 30 deadline," which "shall result in the license being placed on inactive status on the following October 1." And it has not lapsed: every license expires at midnight on September 30 of the final year, an expired license may still be renewed during the 12-month period that follows, and only a licensee who misses that further year "has a lapsed license, and shall be subject to all requirements applicable to persons who have never been licensed."

An Alabama associate broker is renewing an active license. How must the 15 clock hours of continuing education be composed?

• a.Three hours Risk Management, three hours Fair Housing, nine hours electives
• b.Three hours Broker course, twelve hours electives, no Risk Management
• c.Three hours Risk Management, twelve hours electives, no Broker course
• d.Three hours Risk Management, three hours Broker course, nine hours electives✓

Rule 790-X-1-.11(2) is the broker-specific version of the requirement: "Effective October 1, 2022, to meet continuing education requirements, associate brokers and qualifying brokers shall complete fifteen (15) clock hours each license period as set out below: (a) Three (3) clock hours in the Commission-approved Risk Management course. (b) Three (3) clock hours in the Commission-approved Broker course. (c) Nine (9) clock hours in Commission-approved courses." Salespersons under paragraph (1) take the same three hours of Risk Management and then twelve elective hours, so the Broker course is precisely what separates the two, and an option that drops it describes the salesperson requirement. Dropping Risk Management instead inverts the rule, since that block is mandatory for every licensee. There is no mandatory Fair Housing block in the composition, although fair housing is listed in Rule 790-X-1-.11(3) as acceptable elective subject matter. Section 34-27-35(j)(1) supplies the statutory floor of "not less than 15 clock hours" per two-year renewal and adds that hours in excess of 15 are not cumulated or credited toward later renewals.

Alabama issues a new salesperson a temporary license. A qualifying broker supervising that licensee needs to know that the temporary license:

• a.May be renewed once for a second one-year term on payment of a fee
• b.Goes inactive at six months unless the 30-hour post-license course is done✓
• c.Becomes the original license automatically one year after issuance
• d.Stays on active status for the full year while the course is completed

Section 34-27-33(c) runs a one-year clock with a cliff in the middle of it. A temporary license "shall be valid only for a period of one year following the first day of the month after its issuance," and the holder "must complete the course within six months of issuance of his or her temporary license and have his or her original license issued, otherwise his or her temporary license certificate shall automatically be placed on inactive status by the commission." The remaining six months are for catching up: "During the remaining six months his or her temporary license is valid, the holder of a temporary license may complete the course and have his or her original license issued." Rule 790-X-2-.03(3) says the same thing in licensing terms — the temporary license "may be on active status only during the six months following its issuance" — so it does not stay active for the full year. Nothing about the conversion is automatic; it takes the 30-hour post-license course, an application and the fee. And the statute forecloses a second term outright: "A temporary license is not subject to renewal procedures in this chapter and may not be renewed." Miss the full year and it lapses. One reward for finishing on time: under Section 34-27-33(c)(4) the holder of an original license who completed the post-license course is not subject to continuing education for that license's first renewal.

An Alabama salesperson has sent the commission written notice that she is changing qualifying brokers and has copied her current qualifying broker. When may she start writing offers for the new company?

• a.When the new qualifying broker signs the request for transfer
• b.When she pays the $25 transfer fee
• c.When her former qualifying broker returns her license certificate
• d.When the commission issues her new active license✓

Section 34-27-34(e) makes the issued license, not any step on the way to it, the moment practice may resume: "A salesperson or associate broker shall not perform any act for which a license is required after his or her association with his or her qualifying broker has been terminated, or if he or she changes qualifying brokers, until a new active license has been issued by the commission." Subsection (b) lists the steps that produce it — written notice to the commission with a copy to the qualifying broker, the new qualifying broker's request for the transfer together with "a statement assuming liability for the licensee," and a $25 fee, on which "a new license certificate shall be issued to the salesperson or associate broker for the unexpired term of the original license." Each of the other three answers names one of those steps and treats it as authority to practice, which is the mistake the subsection is written to prevent. It is also the qualifying broker's problem: Rule 790-X-3-.15(4) makes it a supervision failure to allow a person to engage in activity requiring an active license while that person's license is "expired, inactive, pending transfer, suspended, or revoked."

An Alabama broker placed his license on inactive status two years ago and now wants it active again in the current license period. What does reactivation take?

• a.Retaking the 60-clock-hour broker course and passing the state examination
• b.Thirty clock hours of approved continuing education and a new background check
• c.Nothing beyond a written request, since the license was renewed on inactive status
• d.Fifteen clock hours of approved continuing education and a $25 fee✓

Rule 790-X-2-.13 states the education price of reactivation: "A total of 15 clock hours of approved continuing education coursework shall be completed to activate an inactive license when the license is activated for the first time in a license period. An additional 15 hours of approved continuing education coursework shall be completed to renew the license on active status for the next license period." Rule 790-X-1-.13(1) explains why the hours are owed now rather than earlier: "Continuing education requirements do not have to be met in order for a license to be renewed on inactive status. However, in order to activate the license, the licensee shall complete the 15-clock hour continuing education requirement." That is exactly why a written request alone is not enough — the hours were deferred, not forgiven. Section 34-27-34(b)(6) charges the $25 fee for a change of status from inactive to active, and charges nothing for the move from active to inactive. Thirty hours and a fresh criminal history check belong to no reactivation rule, and requalifying from scratch is what happens to a lapsed license, not an inactive one. While the license sits inactive, Section 34-27-35(k) governs: it is held at the commission office and "no act for which a license is required shall be performed under an inactive license."

In Alabama, a real estate company that engages associate brokers and salespersons must operate under a:

• a.Registered agent filed with the Secretary of State
• b.Qualifying broker responsible for supervising the company's licensees✓
• c.Notarized partnership agreement filed with the commission
• d.Temporary qualifying broker license renewed annually

Alabama separates the company license from the individual who answers for it. Section 34-27-2(a)(15) defines the qualifying broker as "a broker under whom a sole proprietorship, corporation, partnership, branch office, or lawfully constituted business organization ... 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 real estate licensees licensed therewith." Section 34-27-32 requires the application for a company or branch office license to be made by a qualifying broker, who "shall be an officer, partner, or employee of the company," and each company or branch office "shall be under the direction and supervision of a qualifying broker licensed at that address." Filing a registered agent with the Secretary of State identifies who may receive legal papers and says nothing about who may broker real estate. A notarized partnership agreement is a private business document, not a credential the commission issues. A temporary qualifying broker license is an emergency measure available for no more than six months after a qualifying broker's death or disability, not a standing arrangement to be renewed.

Which broker is eligible to serve as an Alabama qualifying broker for a salesperson?

• a.One licensed in Alabama, whose principal business is brokerage, able to supervise full-time✓
• b.One licensed in any state, whose principal business is brokerage, able to supervise full-time
• c.One licensed in Alabama, whose principal business is anything, able to supervise part-time
• d.One licensed in Alabama, holding an inactive license, able to supervise full-time

Section 34-27-34(a)(1) sets three conditions and joins them with "and": "A broker may serve as qualifying broker for a salesperson or associate broker only if licensed in Alabama, his or her principal business is that of a real estate broker, and he or she shall be in a position to actually supervise the real estate activities of the associate broker or salesperson on a full-time basis." An out-of-state license fails the first condition; a broker whose real work is something else fails the second, which is what stops a licensed broker from lending a credential to a firm he does not actually run; and part-time availability fails the third, since the statute asks for a position to supervise on a full-time basis rather than occasional oversight. An inactive license is not a license to act at all under Section 34-27-35(k), and Rule 790-X-3-.15(1) treats "failing to maintain an active broker's license with the Commission and thereby compromising the licensing status of those licensed under the qualifying broker" as a supervision failure in its own right.

A salesperson's violation of the Alabama license law injures a buyer. Under Section 34-27-34, what is the qualifying broker's exposure?

• a.Responsible to the commission only; civil liability rests with the salesperson
• b.Responsible to the injured party only if the broker knew of the violation
• c.Responsible to the commission and the public, and liable to the injured party✓
• d.Responsible for nothing, because the salesperson is an independent contractor

Section 34-27-34(a)(2) runs the qualifying broker's accountability in two directions at once. "A qualifying broker shall be held responsible to the commission and to the public for all acts governed by this chapter of each salesperson and associate broker licensed under him or her and of each company for which he or she is the qualifying broker," and then: "Additionally, the qualifying broker shall be responsible to an injured party for the damage caused by any violation of this chapter by any licensee engaged by the qualifying broker." So regulatory exposure is not the whole of it, and the subsection ends by making clear that the broker's liability is on top of, not instead of, the licensee's: "This subsection does not relieve a licensee from liability that he or she would otherwise have." Nothing in the text conditions the duty on the broker's prior knowledge; the duty is to see that all transactions comply, which is a supervisory obligation rather than a fault standard. Independent-contractor status does not switch it off either — subsection (a)(3) says the supervision responsibilities "are not intended to and should not be construed as creating an employer-employee relationship," which preserves the tax and contract arrangement without disturbing the statutory responsibility.

Since October 1, 2025, an Alabama broker may be the qualifying broker for two companies only if, on top of written consent from every company filed with the commission:

• a.Each company employs fewer than ten licensees
• b.Each company holds its own branch office license
• c.All of the companies share the same company address✓
• d.All of the companies are owned by the same person

Section 34-27-32, as amended by Act 2025-380, allows the arrangement only where "(1) All companies for which he or she is and proposes to be the qualifying broker consent in writing. (2) He or she files a copy of the written consent with the commission. (3) All companies for which he or she is and proposes to be the qualifying broker share the same company address." The Act rewrote that third condition, which previously read that the broker "will be doing business from the same location" — the same idea expressed as a shared address rather than a shared operation. Common ownership is not the test, and neither is company size. Separate branch office licenses are required for a different reason and do not cure the address requirement: the same section requires a company or branch office license for each separate location, provides that "no person may serve as qualifying broker at more than one location," and makes the branch qualifying broker and the company qualifying broker share equal responsibility for the real estate activities of all licensees assigned there. Rule 790-X-2-.04(5) adds that a broker "shall hold a separate license for each firm which he represents as a qualifying broker."

An Alabama company's qualifying broker dies. The company designates a salesperson of four years' standing, and the commission issues her a temporary qualifying broker license. How long may the company operate under her?

• a.Six months from the date the former qualifying broker died
• b.Six months from the date the commission issues that license✓
• c.Twelve months from the date the commission issues that license
• d.Until the end of the current license period

Act 2025-380 moved the start of this clock, and that is what the question turns on. Section 34-27-32 provides that a company license becomes invalid on the death or disability of a qualifying broker; that within 30 days the corporation, or the remaining partners or successor partnership, may designate another of its officers, members, or salespersons to apply for a license as temporary qualifying broker; that the designee "shall either be a broker or have been a salesperson for at least one year prior to filing the application"; and that if the application is granted, "the company may operate under that temporary qualifying broker for no more than six months after the commission issues the temporary qualifying broker license." Before the Act, the six months ran from the death or disability itself, so any time spent applying came out of the company's window; now it does not. Twelve months is not a period the section uses, and tying the window to the license period would give one company a year and another a week. Unless a fully licensed broker is designated as qualifying broker within that six-month period, the company license and all licenses under the company are classified inactive after two weeks' prior electronic notice.

An Alabama broker in a rural area wants to run his brokerage out of his house. Under the license law's definition of a place of business, what is required?

• a.An office anywhere in the home, provided a sign is posted at the road
• b.An office shared with the licensees he engages, to keep supervision close
• c.An office approved in advance by the probate judge each license period
• d.An office not used for living purposes, with its own entrance and telephone✓

Section 34-27-2(a)(13)a permits it on strict terms: "A licensed broker living in a rural area of this state who operates from his or her home, provided that he or she sets up 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, separate entrance, and be properly identified as a real estate office." A corner of the den with a sign at the road meets none of that. Sharing the office with the licensees he engages is the one thing the paragraph names and forbids. No probate judge approves a place of business; paragraph b instead requires licensees inside a municipality's city limits or police jurisdiction to operate from a separate office there, subject to a hardship waiver from the commission, and paragraph c requires all business records and files to be kept at the place of business. Rule 790-X-2-.07 governs the sign, and Act 2025-380 added Section 34-27-32(k): "An individual may use any office of a company under which he or she is licensed."

Three buyers obtain uncollectible judgments against the same Alabama licensee, all arising out of one transaction. What is the most the Recovery Fund can pay out on that transaction?

• a.$25,000 in the aggregate for all three✓
• b.$50,000 in the aggregate for all three
• c.$25,000 for each of the three claimants
• d.$50,000 for each of the three claimants

Section 34-27-31(b) sets two different caps and this fact pattern is governed by the transaction cap: "Payments for claims arising out of the same transaction shall not exceed twenty-five thousand dollars ($25,000) in the aggregate, regardless of the number of claimants." The phrase "regardless of the number of claimants" is what defeats both per-claimant answers — three claimants share one $25,000 ceiling rather than drawing three of their own. The $50,000 figure is real but belongs to the other cap: "Payments for claims based on judgments or settlements against any one person shall not exceed fifty thousand dollars ($50,000) in the aggregate," which is a lifetime ceiling on one licensee across all transactions. Subsection (a) limits recovery to actual or compensatory damages "not including interest and court costs" sustained within Alabama, and subsection (b)(1) excludes claims against an inactive licensee and claims involving a licensee acting on his or her own or a family member's property. The claimant must notify the commission by certified mail when the action commences and apply to the court on 10 days' written notice for an order directing payment. If the fund pays, all of the licensee's licenses may be terminated and the commission may refuse a new one until the fund is repaid in full plus 12 percent annual interest, a debt a bankruptcy discharge does not erase.

The Alabama Real Estate Commission has served a licensee with a formal complaint. How much notice of the hearing is required, and where is the hearing normally held?

• a.At least 30 days' notice, in Montgomery County unless the commission directs otherwise
• b.At least 10 days' notice, in the county where the alleged violation occurred
• c.At least 15 days' notice, in Montgomery County unless the commission directs otherwise✓
• d.At least 15 days' notice, in the county where the licensee's office is located

Section 34-27-37(a) supplies both halves. "An action against an accused shall begin by serving the accused either personally or by certified mail with a copy of the formal complaint against him or her. The accused shall be given at least 15 days' notice of the time, date, and place of hearing." And on venue: "Hearings shall be held in Montgomery County unless the commission decides to hold the hearing in the county in which the applicant or accused resides, maintains his or her principal place of business, or any other county in which the commission has scheduled a meeting." So the default sits with the commission's seat and moves only at the commission's election, not automatically to the licensee's office or to the scene of the conduct. Thirty days is a real figure in the same section, but it is the deadline for the commission to render its written order after the final date of hearing. Getting to a hearing takes several steps: Section 34-27-36 lets the commission or its staff investigate on its own or on a verified written complaint and issue subpoenas, Rule 790-X-3-.06 puts the probable cause determination with the assigned investigator in consultation with the Attorney General's representative and the Executive Director, Rule 790-X-3-.10 sets out what a formal complaint must contain, and Rule 790-X-3-.11 requires the hearing to be conducted by a hearing officer appointed by the commission.

A licensee is found in violation of conduct prohibited by Section 34-27-36. What is the largest fine the commission may impose for that violation?

• a.$5,000✓
• b.$2,500
• c.$10,000
• d.$1,000

Act 2025-380, effective October 1, 2025, rewrote the penalty provision into a menu and doubled the ceiling. Section 34-27-36 now provides that "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 under this chapter by the licensee." The $100 minimum was left where it was. $2,500 was the old maximum and is the number every study guide printed before October 2025 still gives, which is exactly why it is worth checking the date on the book you are studying from. $1,000 and $10,000 are not figures this section has used. A suspension may continue until the licensee has completed an approved continuing education course, made restitution to accounts holding funds for other parties, or both, and the commission may also stay a revocation or suspension on those conditions.

The commission enters a final order revoking an Alabama broker's license and the broker wants a court to review it. What does the license law require?

• a.A notice of appeal in circuit court within 30 days, with a $200 bond✓
• b.A notice of appeal in circuit court within 15 days, with a $500 bond
• c.A petition in circuit court for a new trial, to be heard before a jury
• d.An application for rehearing, which stays the order until it is decided

Section 34-27-38(a) makes the commission's findings "final unless within 30 days after the date of the commission's final order, the applicant or accused files a notice of appeal in the Circuit Court of Montgomery County, or of the county of his or her residence, if an Alabama resident," and adds that "a party appealing a decision shall post a $200 appeal bond with the clerk of the circuit court." What follows is review, not a retrial: subsection (d) provides that the appeal "shall be conducted by the court without a jury and shall be confined to the record," that the commission's decision "shall be taken as prima facie just and reasonable," and that the court shall not substitute its judgment on the weight of the evidence. Rehearing is a separate route and does not buy time: Section 34-27-37(d) allows an application for rehearing within 30 days of notice of the decision on seven specified grounds, but states that it "does not modify the effective date of the decision," and it is deemed denied if the commission enters no order within 30 days of its filing. An appeal is no stay either — Section 34-27-38(b) says an appeal "does not act as supersedeas," though the court may stay the decision pending appeal.

You are preparing the seller's estimated closing statement on an Alabama home selling for $263,200 in an all-cash sale, with no mortgage recorded. What deed tax must be paid before the deed can be recorded?

• a.$263.20
• b.$394.80
• c.$263.50✓
• d.$526.40

Section 40-22-1(c) fixes the recording privilege tax on a conveyance at "$.50 for each $500 or fraction thereof in value of property conveyed by such instrument," and no deed "shall be received for record unless the privilege or license tax is paid prior to the instrument being offered for record." Divide first: $263,200 divided by $500 is 526.4. The statute taxes the fraction as a whole unit, so round up to 527 units and multiply by $0.50, giving $263.50. $263.20 is what you get by treating the rate as a flat $1.00 per $1,000 and stopping — arithmetically the same rate, but it throws away the four words "or fraction thereof" that the statute prints on purpose. $394.80 applies the mortgage tax rate of $0.15 per $100 under Section 40-22-2 to the sale price; that rate runs on the indebtedness a mortgage secures, not on the conveyance. $526.40 takes the raw 526.4 units and charges $1.00 for each instead of $0.50. This is a figure the licensee has to have right before closing rather than at it: Rule 790-X-3-.04 requires a complete estimated closing statement each time a written offer or counteroffer is presented or prepared.

An Alabama buyer is purchasing for $189,500 with a new first mortgage of $151,640. She has already deposited $2,000 in earnest money, her other closing costs total $2,347.25, and by agreement she pays the mortgage tax while the seller pays the deed tax. How much must she bring to closing?

• a.$38,207.25
• b.$38,434.71
• c.$38,624.30
• d.$38,434.80✓

Two steps. First the mortgage tax: Section 40-22-2(1)a charges "$.15 for each $100 of such initial indebtedness or fraction thereof," so $151,640 divided by $100 is 1,516.4, which rounds up to 1,517 units, and 1,517 times $0.15 is $227.55. Then the statement: $189,500 purchase price, less the $151,640 loan, less the $2,000 earnest money already on deposit, plus $2,347.25 of other closing costs, plus the $227.55 mortgage tax, equals $38,434.80. $38,434.71 comes from multiplying $151,640 by 0.0015 and stopping at $227.46, which is the same arithmetic sin as ignoring "or fraction thereof" — the statute rounds the part-unit up to a whole one. $38,207.25 leaves the mortgage tax off the buyer's side of the statement altogether. $38,624.30 charges her the deed tax as well: $189,500 divided by $500 is exactly 379 units, which at $0.50 each is $189.50 — a real Alabama charge, but on these facts the seller's, and note that it needs no rounding because the price divides evenly.

Where must an Alabama qualifying broker hold funds that belong to others?

• a.In a separate account at any federally insured institution in the country
• b.In a separate federally insured account at an institution located in Alabama✓
• c.In the company's operating account, provided a separate ledger is kept
• d.In an interest-bearing account at a bank the buyer and seller choose

Section 34-27-36 makes it a prohibited act to fail "to deposit and account for at all times all funds belonging to, or being held for others, in a separate federally insured account or accounts in a financial institution located in Alabama." Two words in that sentence are doing the work: separate, which is why the operating account with a tidy internal ledger will not do — the same subdivision independently prohibits "commingling money belonging to others with his or her own funds" — and located in Alabama, which is why federal insurance alone is not enough and an out-of-state bank fails even if it is larger and safer. The account is not the parties' to choose, and nothing requires it to bear interest. Rule 790-X-3-.03(1) adds who must be able to reach it: the qualifying broker must be a customer of the institution holding the account and "one of the persons with authority to deposit and withdraw funds and to write or make checks as necessary on all such accounts." And the money leaves a trail — the same statute requires a complete record of funds belonging to others, showing to whom the money belongs, date deposited, date of withdrawal and other pertinent information, kept for at least three years.

An Alabama salesperson takes a buyer's earnest money check on Tuesday. The contract form says nothing about when the check is to be deposited. Under the commission's rules, when must it be deposited?

• a.Within three banking days
• b.When the offer becomes a contract✓
• c.Within seven business days of receipt
• d.Immediately, on the day it is received

Rule 790-X-3-.03(3) makes the contract form the timekeeper, and supplies a default when the form is silent: "In cases where a check is received as earnest money and the contract form states that the check is to be held for a specific length of time or until the occurrence of a specific event, then the check shall be deposited when the contract form states, or if no time for deposit is specified in the contract form, then the check shall be deposited when the offer becomes a contract." Immediate deposit is the rule for a different kind of money in the same paragraph: "In cases where the funds are U. S. currency, i.e. cash as opposed to a check or note, these funds shall be deposited immediately." Three banking days is a deadline several other states use and Alabama does not. Seven business days is an Alabama number, but it governs the far end of the transaction — disbursement after consummation. Note that the salesperson has a separate and immediate duty of her own: paragraph (2) requires each salesperson or associate broker to pay over to the qualifying broker all funds coming into his or her possession in trust for other parties "immediately upon receipt of same."

An Alabama sale falls apart and the buyer and the seller each demand the earnest money the qualifying broker is holding. What may the broker do?

• a.Release the funds to whichever party the broker believes is entitled
• b.Return the funds to the buyer, who is the source of the deposit
• c.Hold the funds pending a written agreement signed by all parties or a court order✓
• d.Keep the funds as a fee, since a commission was earned on the contract

Rule 790-X-3-.03(5) sets a prompt deadline for the ordinary case and then removes the broker's discretion in this one: "each qualifying broker shall promptly disburse to the appropriate party or parties any trust funds within 7 business days of the consummation of the transaction for which the funds were deposited. If for any reason the transaction terminates without consummation, or if there is a disagreement regarding the disbursement of trust funds, the qualifying broker shall not disburse any trust funds except pursuant to a written agreement signed by all parties after or upon termination, or pursuant to a court order." A broker who decides who deserves the money is adjudicating a contract dispute he is not authorized to decide, and that is true whichever way he decides it, so returning it to the buyer as the original source is the same error wearing a fairer face. Keeping it against a claimed commission is worse: Section 34-27-36 separately prohibits failing within a reasonable time to properly account for or remit money belonging to others. If the standoff persists, paragraph (7) leaves the exit open — the rule does not prohibit a broker from depositing disputed trust funds with the appropriate court "under the rules of interpleader or other lawful procedure."

Under the Alabama Real Estate Consumer's Agency and Disclosure Act (RECAD), if a licensee has not entered a written agreement to represent a consumer as a single agent, the licensee is presumed to be acting as a:

• a.Single agent of the seller under the firm's listing agreement
• b.Transaction facilitator, not the consumer's agent✓
• c.Designated dual agent representing both sides of the deal
• d.Universal agent empowered to act for the buyer in all matters

Act 2025-380 (HB 382), effective October 1, 2025, makes this explicit. Under Section 34-27-82(b), at initial contact and until a broker enters a specific written agreement establishing an agency relationship, the licensee is considered a transaction facilitator and not an agent of that consumer, and in the absence of a signed brokerage agreement that facilitator relationship simply remains in effect. Note the vocabulary: the same Act renamed "transaction broker" to "transaction facilitator" and provides that the two terms carry the same meaning. The licensee cannot be the seller's single agent by virtue of the listing agreement either, because an agency relationship is never assumed, implied, or created without a written bilateral agency agreement signed by the licensee and the consumer. Dual agency now requires the informed written consent of all parties, once all parties have signed the consent agreement, so it cannot attach by default. And a universal agent, empowered to act for a principal in all matters, describes a far broader relationship than brokerage. The Act also removed "sub-agent" from the statute entirely, so subagency through the listing broker is no longer a category Alabama law recognizes.

RECAD requires an Alabama licensee to provide the written agency (brokerage services) disclosure to a consumer:

• a.Only when the consumer asks how the licensee and the company are compensated
• b.Before providing any brokerage service, such as showing a property✓
• c.Within 30 days after both parties have signed the purchase agreement
• d.At the closing table, when the consumer signs the settlement paperwork

Section 34-27-82(c) ties the disclosure to service, not to paperwork. The licensee provides the written disclosure form describing the types of brokerage services as soon as reasonably possible and before any confidential information is disclosed to any other person, and the statute then fixes a floor: such disclosure must occur at least prior to a licensee providing any brokerage service, which includes a licensee showing a property as to a prospective buyer but does not include a seller's agent conducting an open house. Entering into a brokerage agreement is not a trigger at all, and it points the wrong way in time — Section 34-27-82(e) provides that a consumer or customer may not be required to enter into a written brokerage agreement in order for a licensee to show a property, so the showing, and the disclosure, come first. The form is given to the consumer for signature, though the Commission's own form notes the consumer's signature is not required by law or rule. Making the duty depend on the consumer asking how the licensee and the company are compensated gets it backwards, because that compensation information is itself part of what the disclosure must carry, and the consumer who does not know to ask is exactly who it exists for. Thirty days after the purchase agreement is signed is worse, since by then the consumer has negotiated and committed without knowing whether anyone represented them. And the closing table is later still, long after confidences were shared and the bargain struck.

A qualifying broker in Alabama wants one associate to represent the seller and another associate in the same firm to represent the buyer in one transaction. This arrangement is:

• a.Permitted; the qualifying broker designates them in writing as single agents✓
• b.Legal only if the two associates work out of different branch offices of the firm
• c.Prohibited in Alabama, which bars one firm from working both sides of a deal
• d.Automatic dual agency for the whole firm, requiring both parties' written consent

Before October 1, 2025 this arrangement was automatic dual agency for the whole firm. Act 2025-380 (HB 382) reversed that. New Section 34-27-82(g) provides that when two or more licensees under the same qualifying broker are in separate agency agreements with a different party in the same transaction, the qualifying broker can designate those licensees as single agents as to each licensee's own client. The Commission's Real Estate Brokerage Services Disclosure adds that the designation must be in writing and made as soon as reasonably possible. The statute then says plainly that a designated single agent is not a dual agent, and that neither the qualifying broker, the designated single agent, nor any other licensee involved in the transaction is assumed to have knowledge to any other party with whom that licensee has not entered an agency agreement, so one side's confidences are not imputed across the firm. Dual agency in Alabama now means something narrower: Section 34-27-81(8) defines it as one licensee, an individual, representing both the seller and the buyer with the informed written consent of all parties, once all parties have signed the consent agreement. So the arrangement is neither automatic dual agency nor prohibited, and nothing turns on which branch office the associates work out of.

Under RECAD, which duty does an Alabama transaction facilitator still owe even though the licensee does not represent either party as an agent?

• a.The duty to exercise reasonable skill and care and to disclose known material defects✓
• b.The duty to negotiate the lowest price for the buyer
• c.Undivided loyalty to the buyer
• d.The duty to keep the seller's confidential financial information from the buyer at all costs

A transaction facilitator — the term Act 2025-380 substituted for "transaction broker," the two being synonymous under the statute — is not an agent, but RECAD still imposes real obligations: honesty in performing ministerial acts, reasonable skill and care, accounting for money and property, and disclosure of known material defects in the property. What falls away is advocacy. Undivided loyalty to the buyer is the hallmark of an agent serving one client, and a licensee who represents neither party owes it to neither. Negotiating the lowest possible price for the buyer is that same advocacy restated as a task, and it would require taking a side the facilitator has not taken. Guarding the seller's confidences at all costs likewise describes the posture of a seller's agent, and the absolute framing collides with the licensee's duty to disclose what is actually known about the property.

A listing broker in Alabama enters a property in the MLS and tells a cooperating licensee that she will be working the buyer's side as a sub-agent of the seller. Since October 1, 2025, that description is:

• a.Correct; sub-agency arises automatically through the listing service
• b.Correct, provided the seller consents to sub-agency in writing
• c.Wrong; the statute no longer recognizes sub-agency at all✓
• d.Wrong; sub-agency now requires the buyer's written consent instead

Act 2025-380 struck the definition of "SUB-AGENT" out of Section 34-27-81 and removed the word from Section 34-27-82(a), which now reads that "when engaged in any real estate transaction, the licensee may act as a single agent, dual agent, or as a transaction facilitator." That is the whole list. Because the category no longer exists, no amount of consent from either side can create it — which disposes of the two options that try to rescue it with a signature. Nor can a listing entry create it: Section 34-27-82(b) provides that an agency relationship "shall not be assumed, implied, or created without a written bilateral agency agreement signed by the licensee and the consumer," so an MLS offer of cooperation and compensation is not an agency appointment. A cooperating licensee with no written agency agreement is a transaction facilitator by default. The same Act also deleted "LIMITED CONSENSUAL DUAL AGENT" from the definitions and narrowed dual agency to one individual licensee acting for both sides with informed written consent, and it replaced the old pre-printed clause in Section 34-27-8(c) with a new representation disclosure clause in Section 34-27-82(i) that gives the listing licensee and the selling licensee three boxes each: agent, dual agent, or transaction facilitator.

An Alabama licensee knows the house he has listed has a cracked foundation pier hidden behind stored boxes, and says nothing to buyers. Under Section 34-27-36 this is:

• a.Permitted, because the seller's own disclosure form governs what buyers learn
• b.Permitted, because the defect is hidden rather than open and obvious
• c.Prohibited only if a buyer asks about the foundation
• d.A prohibited failure to disclose a defect known to the licensee✓

The prohibited acts in Section 34-27-36 include "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," and the same subdivision draws the line between what counts and what does not: "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." A cracked foundation pier is squarely on the significant side. Being hidden is not a defense but the very trigger — latent is what the subdivision says. Nothing conditions the duty on a buyer asking the right question, which would put the burden on the person who cannot see the defect. And the seller's own disclosure form does not discharge a duty the statute places on the licensee directly: RECAD adds to it, obliging every licensee under Section 34-27-84(a) to provide brokerage services to all parties honestly and in good faith and to exercise reasonable skill and care — duties owed to customers as well as clients.

An Alabama broker persuades a seller to break an existing listing agreement so the seller can list with him instead. Under Section 34-27-36, what makes that a violation?

• a.The seller has suffered a measurable financial loss from it
• b.The licensee discussed an existing contract with a party to it
• c.The original listing broker has filed a written complaint
• d.The substitution is motivated by the licensee's personal gain✓

The subdivision reads: "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." Personal gain is the element that turns persuasion into a prohibited act, and here it is present — the broker gets the listing. Act 2025-380 changed the verb from "break" to "breach" without changing the substance. Note that the subdivision reaches any contract, not only listings, so talking a buyer out of a signed purchase agreement in order to write a new one counts too. Merely discussing an existing contract with a party to it is not the violation; the statute targets inducement to breach coupled with the licensee's own benefit. Nothing turns on whether the injured broker complains, because Section 34-27-36 lets "the commission or its staff ... on its own, or on the verified complaint in writing of any person" investigate the actions and records of a licensee. And no proof of loss is required, since the prohibition is written around the licensee's purpose rather than the outcome.

An Alabama salesperson posts an advertisement showing her team logo in large type and her company's name in small type at the bottom. Since October 1, 2025, the statute defines "prominently" as a font size:

• a.At least half the size of the largest text in the advertisement
• b.At least 10-point type wherever the advertisement appears
• c.Large enough that a reader can find it on close inspection
• d.Equal to or larger than any other name, text, or logo in the ad✓

Section 34-27-36 has long made it a violation for a salesperson or associate broker to advertise "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," and for a qualifying broker or company to allow it. What was missing was a definition, and Act 2025-380 supplied one: "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." That is a comparative test, not a fixed point size, so a rule stated in points misses it, and half-size or merely legible-on-inspection are exactly the compromises the definition was written to foreclose. Teams are the usual occasion for this: Rule 790-X-3-.16 requires a team name to include the word "team" or "group" and forbids terms that suggest the team is a company, including "corporation," "limited liability company," "partnership," "business," "enterprise" and "company," and Section 34-27-39 requires a team advertisement to name at least one team member and the company the licensee is licensed with.

Which provision must appear in an Alabama written listing agreement if the licensee is to stay clear of Section 34-27-36 and the commission's rules?

• a.A fixed date of expiration, with no automatic extension✓
• b.A net listing price above which the broker keeps the excess
• c.An automatic extension clause running until the property sells
• d.A clause allowing the broker to accept a rebate from the buyer

Section 34-27-36 makes it a prohibited act to fail "to include a fixed date of expiration in a written listing agreement or failing to leave a copy of the agreement with the principal," and Rule 790-X-3-.05 is a single sentence: "Listing contracts shall contain no provision for automatic extensions." So an automatic extension is not merely unhelpful, it is the opposite of compliance, and it would defeat the fixed expiration date the statute demands. A net listing is itself a prohibited act when a broker accepts one — the statute describes it as an agreement that "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." A clause authorizing a rebate would be written evidence of another violation, because the same section prohibits "paying or receiving any rebate from any person in a real estate transaction." And the copy requirement is not the end of the paperwork: a separate subdivision requires the licensee to voluntarily furnish a copy of each listing, contract, lease and other document to each party executing it with reasonable promptness.

An Alabama contract shows a $210,000 price and no seller concession, while a side agreement gives the buyer $8,000 back at closing that the lender is never told about. Under Section 34-27-36 the licensee has:

• a.Done nothing wrong, because the lender is not a party to the contract
• b.Misrepresented the true terms of a sale to a lender✓
• c.Done nothing wrong, provided the buyer and seller both agreed to it
• d.Violated the rebate rule, but no disclosure duty

The prohibited acts include "misrepresenting or failing to disclose to any lender, guaranteeing agency, or any other interested party, the true terms of a sale of real estate." The statute names lenders and guaranteeing agencies on purpose, because they price and underwrite a loan off terms they cannot see for themselves, so not being a party to the contract is the reason the duty exists rather than a defense to it. Agreement between buyer and seller cannot cure it either, since the person kept in the dark is precisely the one the subdivision protects. The rebate prohibition is a real and separate provision — Section 34-27-36 forbids paying or receiving any rebate from any person in a real estate transaction — but treating this as only a rebate problem misses the misrepresentation, which is the graver of the two and the one that reaches the lender. A licensee facing this pattern also has RECAD to answer to, since Section 34-27-84(a)(1) requires brokerage services to be provided to all parties honestly and in good faith.

For how long must an Alabama qualifying broker keep copies of contracts, leases and listings, and records of funds held for others?

• a.One year
• b.Five years
• c.Three years✓
• d.Ten years

Two separate subdivisions of Section 34-27-36 set the same period, which is why it is worth learning once. One makes it a prohibited act to fail "to keep for at least three years a complete record of funds belonging to others showing to whom the money belongs, date deposited, date of withdrawal, and other pertinent information." The other makes it a prohibited act for a qualifying broker or company to fail "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." A third three-year duty sits in RECAD: Section 34-27-83 requires each licensee's signed acknowledgment of the agency disclosure office policy to be retained by the company for three years. One year and five years are not periods this chapter uses, and ten years overstates the duty — a broker who plans around it has still misjudged the rule that governs. Where the files live is also fixed: Section 34-27-2(a)(13)c requires all business records and files to be kept at the place of business, Rule 790-X-3-.09 lets commission staff inspect them, including six months of bank statements with canceled checks and reconciliations for every escrow account, and failing or refusing on demand to produce a document, book or record for that inspection is a prohibited act of its own.