Alabama Real Estate Broker Exam — All Questions

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.