29.2 AL – Honesty and Good Faith Issues
Topic 29.2: Violations — Honesty and Good Faith Issues
Alabama requires licensees to be trustworthy and competent. The first obligation owed to all consumers is to provide services honestly and in good faith. This topic covers common violations tied to dishonesty, misrepresentation, deceptive advertising, and untrustworthy conduct.
What “honesty and good faith” means in real life
Under Alabama license law, being “trustworthy and competent” isn’t just a nice trait—it’s a requirement. A licensee violates the law when they use fraud, deceit, half-truths, or misleading conduct that breaks the duty to act honestly and in good faith.
Honesty & good faith violations (what to recognize)
Using fraud, misrepresentation, deceit, or making a material misstatement of fact to obtain (or attempt to obtain) a license for yourself or someone else is a violation.
Examples: cheating on the exam, false application statements, using your name to obtain a license for another person.
Licensees must be honest and forthright when buying/selling/trading/renting property belonging to the licensee or close family (spouse, child, parent). Fraud or misrepresentation here is a violation.
Key risk: failing to disclose ownership interest and/or known issues while persuading a buyer.
Even though Alabama is a caveat emptor state, licensees must not make a material misrepresentation or fail to disclose a known latent structural defect or other significant defect that would matter to a buyer’s decision.
The defect must be more than trivial and must be significant to the purchase/lease decision.
Making false promises to persuade someone to sign a contract/agreement is dishonest and a violation.
Example: promising future neighborhood improvements or guaranteed value increases when you know it’s not true.
A licensee may not continue false promises/misrepresentations through another agent/salesperson or through advertising. “Having someone else say it” doesn’t fix it.
Publishing (or causing to be published) an ad that deceives the public—or is likely to deceive—is prohibited. Ads must not create a misleading impression.
Example: inflating bedroom count, describing a vacant lot as a “park,” or calling a retention pond “waterfront.”
A licensee must not convince a party to breach an existing contract and substitute a new one primarily to benefit the licensee (for example, to increase commission).
Broad category: any conduct showing dishonest dealing, bad faith, or untrustworthiness can be a violation—like failing to keep confidences or failing to deliver offers promptly.
It’s illegal to help/employ/associate with an unlicensed person and expect them to perform acts that require a license for compensation (selling, listing, showing, negotiating, etc.). Aiding/abetting a workaround is also prohibited.
If a licensee wants to purchase a seller-client’s property (directly or indirectly), the licensee must disclose that interest. Using a relative or another person to buy it doesn’t remove the disclosure requirement.
Licensees must disclose the true terms of a sale to lenders, guaranteeing agencies, and other interested parties—and must not misrepresent those terms (for example, misrepresenting value/price).
Alabama
