Section 19

Examples of illegal rebates include:

- A mortgage company, title company, or insurance agent pays a fee to a licensee for referring business to it. - An electrician, flooring installer, or other professional pays a fee to a licensee for referring business to that person's company. - A licensee pays a fee to a consumer for referring a buyer or seller to that brokerage.

What is a licensee required to disclose as a personal interest disclosure?

- ALL licensee status - ANY brokerage relationships - ALL possible conflicts of interest when acting as principal

What can you do to protect your clients and yourself from possible fraud in a real estate transaction?

- Document everything. - Disclose everything to the appropriate parties. - Verify the accuracy of closing statements. - Bring the situation to the attention of your broker. - Withdraw from the transaction if it seems to be fraudulent.

MAAP

- Material - Adverse - Actual - Physical

What are violations related to offers in Alabama?

- Using false promises in order to sway, convince, or compel anyone to enter into an agreement or contract - Failing to notify both parties when the offer is submitted that they'll be responsible for paying specific closing costs and those approximate costs - Neglecting to submit all written offers to the seller for consideration - Entering into a net listing, because these listings are illegal in Alabama

Physical

- any problematic property condition that may not necessarily be immediately apparent - the licensee has a duty to disclose any adverse material fact about the physical condition of the property

Rebate

- any unearned fee, kickback, or thing of value given in connection with a transaction - Alabama Code strictly prohibits licensees from either giving or receiving rebates in real estate transactions

Adverse

- negative, usually regarded as any information that would reduce a property's value - any information that would cause an ordinary person to choose not to go through with the real estate transaction

Every Alabama broker is required to maintain at least _____ designated, federally insured trust account at a financial institution in Alabama.

1

Two key ways to differentiate a rebate from other payments:

1. Rebates tend to be given after or outside of closing, whereas something like a prize or inducement offered to consumers (which is legal) is given in advance (or sometimes at closing). 2. Rebates are always unearned compensation, and they're illegal even if they're disclosed. They needn't be in cash to be illegal—paying for a vacation is still considered a rebate.

Aiden, a licensee in Tuscaloosa, recently helped buyer client Rita close on a real estate transaction. Which of the following is illegal for him to give or receive after this transaction ends?

A cash gift to Rita as part of an inducement to persuade her to use his services in the first place.

Which of the following statements about material facts is true? All material facts are related to physical conditions. All parties considering a property would regard each material fact in the same way. A material fact may have more or less effect on a buyer based on the buyer's needs and values. Material facts are only those that can be easily seen or discovered.

A material fact may have more or less effect on a buyer based on the buyer's needs and values.

Salesperson Brandon bought a small fishing camp with three college friends about nine years ago. They are all busy with careers and growing families, so they've decided to sell it. Brandon's friends have asked him to list the property through his brokerage. What does Brandon have to do to comply with personal disclosure requirements?

Brandon must make written disclosure of his licensee status to any interested buyers and all parties in the transaction.

Alabama licensee Terrence can conduct a lottery to persuade people to do business with him under which, of any, of the following circumstances?

He can't conduct a lottery under any of these circumstances. Holding these types of lotteries is illegal in Alabama.

Agent Jeff has just received an offer for his seller client Maggie. He goes over the terms of the offer with her and explains what some of the contract-specific language means. What else, if anything, does he have to do to avoid breaking Alabama license law?

He must explain that Maggie will have to pay closing costs.

Sue believes she's about to get into an undisclosed dual agency position. What should she do?

Inform all parties to the transaction

Noah's seller client, Amy, has contracted with Trevor, who wants to buy Amy's property. Another licensee, Jaco, approaches Amy with an offer that's $20,000 more than Trevor's, and he wants Amy to break her contract with Trevor. Which statement about this situation is true?

Jaco is in violation of Alabama law.

If an Alabama licensee violates a compensation law, what's one possible sanction the commission may impose?

License suspension

Seller Trevor calls licensee Nate. "My current agent isn't doing anything to sell my house," Trevor says, "and I need to get it sold! I saw your billboard, and I'm wondering if you can represent me." What should Nate do?

Nate should tell Trevor that he's happy to be his agent, but he'll have to wait until his current agency contract has ended.

Janice is a licensee with a buyer client who just found a great house. Which of the following is she NOT required to disclose to her client? She co-owns the property. She knows the house was damaged in a severe fire two years ago. She lives two blocks away. The owner is her brother-in-law.

She lives two blocks away.

Dean was very motivated to sell his house and was excited when he got an offer. When he realized the buyer couldn't qualify for the purchase price, he decided to accept a second mortgage without mentioning it to his lender and reduce the sales price accordingly. Which type of mortgage fraud scheme is this an example of?

Silent second

Assuming licensee Shannon has actual knowledge of all of the following property issues, which of these issues should she disclose to prospective buyers? The nearby school system is one of the worst in the area. The neighbors like to throw a lot of parties. The tree in the front yard is at least 50 years old. The upstairs bathroom has a leaky toilet.

The upstairs bathroom has a leaky toilet.

Which of the following is true about net listings in Alabama?

They often involve a conflict of interest.

Under what circumstances would undisclosed dual agency be most likely to occur?

When representing a seller and assisting an unrepresented buyer Because an agency agreement is already in place with the seller (the listing agreement), assisting the buyer too much can lead to undisclosed dual agency.

Jenna owes the commission some money. She doesn't have enough money in her account right now to cover the fee, but she'll get paid in a week. However, if she waits until then to pay, she'll have to pay a late fee, as well. Jenna has some options. Which one violates license law?

Write a check now. When it bounces and gets returned to her in a week, she'll have the money.

Which of the following actions might be considered a red flag signaling mortgage fraud?

Your buyer requests a specific appraiser.

True/False: Lotteries are legal in Alabama

false

Determine if the real estate licensee's actions constitute contractual interference or not: Bear, who represents buyer Crimson, approaches Rachel's seller client, Aubie, with a to-die-for offer because Crimson must have Aubie's house at any cost. It's her dream home. Rachel explains that Aubie's house is already under contract, but Bear tells Aubie directly that there's big money in it for him if only he'll terminate the existing contract and agree to enter into a contract with Crimson.

interference

Determine if the real estate licensee's actions constitute contractual interference or not: The property that Harper's buyer client wants to make an offer on is already under contract. Harper has written a back-up offer for her buyer and submitted that to the seller for consideration.

not interference This isn't contractual interference. Contractual interference would have occurred if Harper had urged the seller to terminate the existing contract so that she and her buyer client could have entered into a contract with the seller.

Material

the information is considered important in deciding what course of action a buyer takes regarding the real estate transaction

Actual

the information is known to the licensee regarding the physical condition of a property or could be plainly noticed by the licensee, regardless of whether it is disclosed by the owner/seller

True/False: Licensees aren't permitted to promote themselves as licensees without noting their brokerage name conspicuously in the ad.

true you must have your broker's name clearly in any ad

True/False: Alabama law prohibits real estate licensees from interfering with contracts, i.e. one real estate broker trying to encourage another broker's client to terminate a sales contract in order to get business?

true, it is prohibited

A check used to pay a fee to the real estate commission was returned by the bank for insufficient funds. This is definitely poor financial practice, but is it also a license law violation?

yes