25.1 AL – The Real Estate Commission

The Alabama Real Estate Commission (AREC) exists to serve and protect the public by licensing and regulating real estate professionals.
AREC enforces Alabama license laws and also creates and enforces its own rules to further regulate real estate practice in Alabama.

Why AREC Exists (History + Role)

• Created: 1927 (Legislative Act 1927, No. 344)
• Expanded: Real Estate License Law of 1951; amended in 1953, 1963, and 1982
• Main purpose: protect the public through licensing and regulation of real estate professionals
• Authority: enforces Alabama license laws and creates/enforces Commission rules

Commission Key Characteristics (Membership + Terms)

AREC is made up of nine commissioners appointed by the Governor with advice and consent of the State Senate.
Appointments are made from a list nominated by a professional real estate society/trade association.

• 7 members: Alabama residents/citizens for at least 10 years and brokers/salespersons for at least 10 yearsAlso: must not have been convicted of federal or state license law violations; each from different U.S. Congressional Districts.
• 8th member: an African-American member who meets membership requirements (may be from any district; subsequent appointees from different districts)
• 9th member: a consumer member (not a licensee; additional requirements apply)

• Terms: 5-year staggered terms; no more than two consecutive terms (but remain until successor is appointed/confirmed)
• Term expiration: September 30 of the 5th year
• Compensation: $300/month + per diem and travel allowances for meeting days
• Quorum: 5 members (majority) to conduct business

What AREC Does (Core Functions)

• Prescribes rules for licensure and real estate practice
• Licenses salespersons and brokers
• Registers time-share plans and regulates related advertising and sales
• Enforces laws: investigates/prosecutes complaints and penalizes violations
• Establishes and maintains a Recovery Fund
• Manages internal operations (finances, HR, facilities, resources)

AREC may employ an executive director, assistant executive director, and staff, and may use advisory committees/working groups/task forces.

Records, Seal, and Liability

• AREC adopts an official seal to authenticate records/documents.
• Copies of AREC records can be used as evidence in court and are open to public inspection.
• Commissioners are not liable for damages resulting from acts performed as part of their duties.

Key Definitions (Know These for the Exam)

• Broker: person licensed as a broker under Alabama license law to conduct real estate business.
• Qualifying (principal) broker: broker responsible for supervising the real estate acts of the company/organization and associated licensees.
• Associate broker: any broker other than the qualifying broker.
• Salesperson: person licensed to conduct real estate transactions.
• Licensee: any broker, salesperson, or company holding an Alabama real estate license.
• Company: licensed business organization (sole prop, corporation, partnership, branch office, etc.) conducting real estate transactions.
• Commission: AREC (or the fee paid to a broker/salesperson in a transaction—context matters).
• Engage: contractual relationship between a qualifying broker and an associate broker/salesperson (employee or independent contractor).
• Real estate transaction: purchase, sale, lease, rental, option, or exchange of an interest in real estate.
• License period: October 1 through September 30; a 2-year period beginning/ending in even-numbered years.
• Expired license: not renewed by deadline; placed on inactive status; may still be renewed within prescribed timeframe.
• Lapsed license: no longer valid; cannot be renewed—must re-qualify as a first-time applicant.
• Place of business: designated office for real estate business (not used for living/other business), separate business phone, properly identified, and where records are kept.
• Team: two or more licensees at the same company working together as a distinct group providing licensed services.

Exemptions (When Licensing Requirements Don’t Apply)

• Owner managing/selling own property (or spouse/child/parent’s property)
• Attorney-at-law performing duties as an attorney
• Person acting under power of attorney without compensation and in good faith
• Trustees/receivers/administrators/executors/guardians acting under authority of court order, trust, or will
• Public officer performing official duties
• Broker’s assistant doing clerical/administrative duties (does not show property)
• Apartment building manager (but not an on-site condominium building manager)
• Time-share seller performing only acts covered under that license
• Transactions involving sale/lease/transfer of cemetery lots

Revenue Fund (How AREC Is Funded and Pays Expenses)

Most money collected by AREC (fees, fines, charges, etc.) is deposited into the State Treasury to the credit of the
Real Estate Commission Revenue Fund.
Exception: the $30 Recovery Fund fee paid by each applicant for original broker/salesperson licensure is not part of the Revenue Fund.

• Revenue Fund money is disbursed by the state Comptroller as directed by the executive director (at the Commission’s direction).
• A proportionate share of multi-year license fees and certain research/education fees are reserved in a Proportionate Fund and disbursed quarterly
  to the Real Estate Research and Education Center.
• Interest/income from investments is deposited into the Revenue Fund for Commission expenses.
• Commission expenses may not exceed total fees/charges collected or the amount appropriated by the Legislature.
• Unspent Revenue Fund money at fiscal year-end transfers to the following year.

Quick Check-In (2 Questions)