Alabama Real Estate Broker Exam — All Questions

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.

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.