Alabama Real Estate Broker Exam — All Questions

Under the Alabama Real Estate Consumer 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.Subagent of the seller
• b.Designated dual agent
• c.Transaction broker who assists without representing either party as an agent✓
• d.Universal agent for the buyer

RECAD makes the transaction broker the default relationship in Alabama. Absent a signed single-agency (or other written) agreement, a licensee is a transaction broker who helps the parties complete the transaction without becoming the advocate or fiduciary of either. Full single agency, dual agency, or subagency arise only by written agreement, which is why the agency disclosure is central to Alabama practice.

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

• a.Prior to entering into a written brokerage agreement or before the consumer discloses confidential information, whichever occurs first✓
• b.Only at the closing table
• c.Within 30 days after the purchase agreement is signed
• d.Only if the consumer asks how the licensee is paid

RECAD requires the licensee to obtain a signed statement acknowledging the disclosure of the types of brokerage services before entering a written brokerage agreement or before the consumer discloses confidential information. Disclosing the relationship early lets the consumer understand whether they are represented before they reveal negotiating information.

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.Prohibited in all cases in Alabama
• b.Permitted as limited consensual dual agency with the informed written consent of both parties✓
• c.Automatic and requires no disclosure because two different agents are used
• d.Legal only if the two associates work in different branch offices

Under RECAD, when a firm represents both sides, it becomes a limited consensual dual agency (sometimes handled through designated agents). It is permitted only with the informed written consent of both the buyer and seller. As a dual agent the firm cannot fully advocate for either party and may not disclose one party's confidential negotiating information to the other.

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

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

Even without agency, RECAD requires the transaction broker to perform ministerial acts with honesty, exercise reasonable skill and care, account for money and property, and disclose known material defects about the property. What the transaction broker does not owe is the fiduciary loyalty and advocacy that a single agent owes a represented client.