The Legal Line is a free service for AAR members to receive answers to questions about the AAR forms, NAR’s rules, Alabama license law, and basic real estate questions. We’ve selected a few recent questions and answered them below for your reference. If you have questions that our attorneys can help with, please contact us!

Q1: I know Alabama is a caveat emptor state. What if the seller completes a seller disclosure form? Does that destroy caveat emptor?

A1: Caveat emptor says that a seller has very little duty to report conditions related to their property to prospective buyers. When a seller completes a disclosure form, however, they are voluntarily providing the property information to prospective buyers. At that point, the seller has a duty to ensure that the disclosure form is completed accurately to the best of their ability – a disclosure that the seller knows to be inaccurate/ incomplete would fall outside of the protection of caveat emptor. Furthermore, since the disclosure form puts the listing licensee on notice about the condition of the property, that licensee would then be required to disclose any conditions which 1) the buyer specifically inquired about (that licensee had knowledge of) or 2) affect health/safety. All this being said, if there was an issue with the property that the seller wasn’t aware of, the seller would not have a duty to disclose it (since they don’t know about it) and caveat emptor would still apply to that condition.

Q2: One of my listings was under contract, but the deal fell through. The parties agreed to terminate the contract, but earnest money is still in dispute. Can I re-list the property as available on the MLS?

A2: Legally, you are permitted to re-list the property on the MLS as long as the purchase agreement has been terminated, even if the earnest money disbursement is still being settled. Please check with your MLS to ensure that they do not have any special rules in this situation.

Q3: I agreed to a certain amount of compensation when I signed my agreement with the buyer, but the seller is offering me more compensation now. May I amend my buyer agreement to reflect the higher amount of compensation?

A3: We strongly recommend against it. The goal of NAR’s new rules is for the buyer to have a clear picture of your compensation before they even tour a property. As such, you shouldn’t seek to get more compensation than what you originally put on the agreement, unless you will also be providing additional services.

Q4: I agreed to a certain amount of compensation when I signed my agreement with the buyer, but it is becoming clear that the buyer won’t be able to afford the transaction if they pay me that full amount. May I amend my buyer agreement to reflect a lower amount of compensation?

A4: Yes, your agreement can be amended to reflect a lower amount of compensation. The only limitation on this is that it must be done in good faith: if you set your compensation artificially high with no plan to charge the amount of compensation you originally list, that’s an issue. But if you set your compensation at a reasonable amount/rate and later see that it’s in the buyer’s best interest to lower it, you are free to do so. (All of this being said, you are also permitted to stick with the original amount listed in your agreement and require payment from the buyer.)

Legal Disclaimer: These answers provide general information and do not constitute legal advice. If legal advice or other expert assistance is needed, the services of a competent professional should be sought.