Alabama License Law Enforcement Overview: Unit 27

Start an investigation because this could be negligence by the buyer

A buyer files a verified complaint with the Commission alleging she had a written buyer's brokerage agreement with an agent. The agent knew the seller would accept an offer of $125,000 for a property but encouraged the buyer to pay $150,000 because the agent's commission would be higher as a result. If true, what will the Commission likely do?

Even if successful in the lawsuit and the other conditions are met, the consumer cannot recover from the recovery fund.

A consumer files a lawsuit against an associate broker and sends a copy to the broker but not the Commission. What are the consequences?

The first time the license is issued to active status. A licensee on inactive status is not required to contribute to the fund until the license is activated.

A full-time college student passes his license exam and has his license issued on inactive status because he does not plan to practice real estate until after graduation. When does he pay the Alabama Real Estate Recovery Fund fee?

Yes, this is an allowed punishment.

A licensee agrees to plead guilty to a minor license law violation in exchange for a punishment of taking specified risk management courses within the next 30 days. Is this allowed?

restitution.

A licensee commingled personal and trust account funds, giving the IRS grounds to seize the entire trust account for the licensee's past due taxes. The commission ordered the licensee to repay clients all of their money that was seized by the IRS. This punishment is called

The mother is not an allowed consumer. The spouse, child, or parent of a licensee is not allowed to recover from the fund.

A licensee sells his mother a vacation condo with known mold and Chinese drywall problems. When asked about these issues by her mother, the licensee denies they exist. After closing, correcting the problems cost the mother $35,000. The mother sues the licensee, provides proper notice to the correct parties, and completes all steps to receive compensation from the fund. Why will a court deny any recovery to the mother?

It is okay for the licensee to collect the earned commission.

A licensee's license was suspended and on the day after the suspension, the licensee had a closing on a listing. What is TRUE concerning the agent's listing commission?

The website must be taken down and no longer be viewable by the public

A qualifying broker is suspended for 30 days. What action must be taken relative to the firm's website?

No, because the recovery fund is for the protection of consumers, not licensees with commission disputes

A qualifying broker owes one of his licensees $25,000 in unpaid commissions. If the licensee files a lawsuit against the broker, wins, and meets all other conditions, can the licensee collect from the recovery fund?

Cancel all listings and property management agreements

A qualifying broker whose license had been revoked is allowed to perform which real estate activity?

decline involvement in a dispute over commissions or fees between licensees. The local association of REALTORS® can arbitrate monetary disputes between cooperating brokers who are members of the organization.

A real estate professional filed a complaint with the Real Estate Commission alleging that a seller failed to pay a commission she owed him. The AREC will

No, because this is not an allowed punishment. The minimum allowed fine is $100.

A salesperson is charged with placing real estate signs on property without the owner's permission. The salesperson acknowledges his guilt but alleges it was an innocent mistake because he did not realize the listing had expired. He offers to plead guilty in return for a $50 fine and attendance at a Risk Management for Salespersons class. Is the Commission likely to accept this offer?

failed to properly supervise the salesperson.

A salesperson is found guilty of violating the Real Estate License Law. The Alabama Real Estate Commission may discipline the salesperson's employing broker if the broker

$0. The fee is paid only once, when the original license is issued for a salesperson's license. All brokers must have been active salespersons for at least 24 months.

A salesperson obtains a broker's license after the appropriate experience, education, and testing. At the time of issuance of the broker's license, how much is the Alabama Real Estate Recovery Fund fee?

other licensees. Although the Commission does not investigate disputes between or among licensees.

A very large number of the complaints filed with the Commission are by

a fine of up to $2,500. The Commission imposes a fine of no less than $100 nor more than $2,500 per count in the complaint.

A woman's Alabama broker's license expired three years ago, but she placed ads in the newspaper seeking listings and continued to act as a broker. If found guilty, and if it is a first offense, the woman's maximum penalty will be

neither bonding nor E&O insurance.

Alabama law requires

False, because the Commission will also investigate if AREC auditors reveal problems

All Commission investigations begin as a result of verified consumer complaints.

Investigate. Although Alabama does not allow a no contest plea, this same question often appears on license exams. Assume, for purposes of answering the question, that Alabama does allow the plea.

An agent enters a plea of "no contest" to a minor crime of moral turpitude because paying the fine is much cheaper than hiring an attorney. What will the Commission do?

Yes, because the broker is responsible for all licensees in the office. It is the licensee's responsibility to make sure the RECAD disclosures are understood by a consumer.

An associate broker routinely gives RECAD disclosure pamphlets to Spanish-speaking clients and customers and obtains their signatures, but the associate broker never explains the various brokerage relationships to anyone or engages in any dialogue to be sure they understand. Can the qualifying broker be charged with a violation of the license law as a result?

No, they need not stop in any circumstances.

An associate broker who is also a team leader has her license suspended for 90 days. Must all the members of the team stop their real estate activities?

send a copy of their lawsuit to the AREC when the suit is first filed.

Before consumers can collect from the Real Estate Recovery Fund, they must

Submit a verified claim in the court that entered judgment against the licensee

How does a consumer start the process of claiming money from the recovery fund?

Written notice to the commission that a verified claim has been entered in the court by the consumer

How does the consumer notify the Commission that it plans to make a claim against the recovery fund?

15 days. The written notice provides a statement of charges, which is sent by certified mail to the licensee's last known business address at least 15 days before the scheduled hearing. The notice of hearing gives the date, time, and place of hearing.

How many days in advance of a scheduled hearing must the Commission send a written notice to the licensee?

12%

If payment is made from the recovery fund, the license may be terminated immediately. The Commission may refuse to issue a new license until that person has repaid the fund in full, plus interest at what percentage per year?

the complainant only.

If the Commission decides there has been no violation of Alabama license law and declines to pursue a formal complaint, it sends notice of its decision to

$30 from each active salesperson and broker.

If the Real Estate Recovery Fund falls below $500,000, the Alabama Real Estate Commission assesses

When their license is issued to another qualifying broker

If the qualifying broker's license is revoked, when may the salespersons in the office return to real estate activities?

Circuit court, without a jury

If there is an appeal after a decision by the Commission, who hears it?

Alabama Real Estate Commission.

In Alabama, a written complaint against a licensee should be sent to the

Yes, they are considered Class A misdemeanors.

Is there any criminal liability for violating Alabama's license laws?

Impose a civil penalty not to exceed $5,000. The Real Estate Commission has authority to investigate a licensee upon that body's own motion; to subpoena books, papers, records, and witnesses; and to require a mental examination. The Real Estate Commission also has the authority to impose a civil penalty not to exceed $2,500.

Which activity does the Real Estate Commission NOT have the authority to do?

Undisclosed dual agency

Which of the following activities is cause for a Real Estate Commission investigation?

The Alabama Real Estate Commission has been unable to obtain a group insurance policy to be made available to all licensees.

Which statement is TRUE concerning errors and omissions coverage in Alabama?

The accused

Who can waive the right to a hearing for a formal complaint by the Commission?

The court that entered judgment against the licensee

Who determines the consumer's eligibility to receive compensation from the recovery fund?

Both the respondent and the complainant

Who has the right to require the attendance of subpoenaed witnesses?

30 days

Within how many days of the final hearing must the Real Estate Commission issue a written report?

Errors and omissions-It is a type of insurance that covers the equivalent of malpractice claims against real estate licensees for errors, mistakes, and negligence.

What does E&O stand for?

Receive compensation earned before the effective date of the suspension or revocation

What is an allowed activity for a licensee whose license is suspended or revoked?

30 days

What is the grace period after a license revocation or suspension?

they might suffer adverse consequences as a result of a qualifying broker's punishment.

Salespersons who are scrupulously honest and ethical and follow all rules and regulations of the Alabama Real Estate Commission should nevertheless understand the various Commission punishments because

$50,000. Payments for claims based on judgments or settlements against any ONE PERSON may not exceed $50,000 in the total.

What is the limit of compensation from the Alabama Real Estate Recovery Fund against any one person?

Reprimand

What is the minimum punishment that the Commission is allowed to impose?

Proceedings in civil or criminal courts. Because the Commission does not have jurisdiction over non-licensees, those hearings may not be conducted by the Commission.

What mechanism does the Commission use to pursue complaints against non-licensees?

1. Misrepresentation on the application for a license 2. Placing a For Sale sign on a property without the owner's consent 3. Misrepresentation when selling for self or for family members

The Alabama Real Estate Commission may investigate all of the following actions

30 days

The accused licensee or any other person has the right to file for an application for a rehearing within _____ after an adverse decision by the AREC.

The qualifying broker must return the license to the Commission.

What must be done with a suspended license?

$30

When an Alabama licensee receives her initial real estate license, how much must she pay into the Alabama Real Estate Recovery Fund?

Yes, because landlords must be given the opportunity to change brokers to someone of their own choice

The qualifying broker for a property management firm suffers a license suspension for 30 days. If she arranges for another qualifying broker to take over the company during that time, must she disclose the suspension to the landlords whose property she manages?

consumers who have suffered monetary damage as a result of a licensee's violation(s) of the Alabama Real Estate License Law.

The recovery fund provides payment to

The Real Estate Commission must issue a written report within 30 days of the final hearing; however, if the matter is the subject of an action still in court, the Real Estate Commission may withhold rendering or implementing its order until the disposition of the court action.

The subject of an action is still in court. At this point, how long can the Real Estate Commission withhold rendering or implementing its order?

the Alabama attorney general.

To determine probable cause for a formal complaint, the Commission consults with

Their licenses are placed on inactive status on the effective date of suspension.

Under the Alabama Real Estate License Act, the license of a qualifying broker is suspended. Which of the following statements is TRUE regarding the licenses of salespersons employed under that broker?

$25,000 for the same transaction. Payments for claims arising out of the SAME TRANSACTION may not exceed a total of $25,000, regardless of the number of applicants.

What are the limits of compensation, if any, from Alabama's real estate recovery fund?