Answers provided on the Legal Line do not constitute legal advice. If you have a question that requires legal advice, AAR recommends speaking with retained counsel.

AAR's Legal Line is here to help all AAR members with questions they may have about the AAR Statewide Legal Forms, Alabama license law, property law, and more. Below are some recent questions and answers that you may find helpful.

Q1: If a buyer submits a repair addendum requesting repairs only, with no change to the purchase price, closing costs, seller concessions, or other financial terms, is an updated Estimated Closing Statement required at that time?

A1: No. The requirement to provide an Estimated Closing Statement applies during the pre-contract offer and counter-offer process, and after contract formation it applies when there is a post-contract amendment which changes the financial terms or obligationsreflected in the Estimated Closing Statement. Accordingly, if a buyer submits a repair addendum requesting repairs only, with no change to the purchase price, closing costs, seller concessions, or any other financial terms, an updated Estimated Closing Statement is not required at that time. If repair negotiations later result in a financial adjustment, such as a price reduction, seller credit, or other change affecting the buyer's closing costs, an updated Estimated Closing Statement should be provided at that point.

Q2: If the parties intend the Seller Concession to be applied toward discount points specifically, should that intended use be identified in the Purchase Agreement?

A2: Yes. While it is not required that the parties identify specific expenses for which a Seller Concession will be applied, it is recommended that they do so when there is a particular intent (such as applying the Seller Concession to discount points). Notating the intended use in the Seller Concession provision of Paragraph 8 or Paragraph 31 (Additional Provisions) helps ensure the funds are applied as intended and helps avoid confusion or alternate interpretation at closing.

Q3: If an earnest money check is mailed before the deadline in a Purchase Agreement, is the buyer considered to have timely deposited the funds?

A3: The answer will depend on the terms of the Purchase Agreement. Generally, when a contract requires earnest money to be “deposited” or “delivered” by a certain deadline, the buyer must ensure the escrow holder receives the funds within the timeframe required by the agreement. Simply mailing a check by the deadline may not be sufficient if the escrow holder does not receive the funds in time. If additional time is needed for delivery, the parties may agree in writing to extend the earnest money deadline.  

Q4: If a buyer is a business entity, such as an LLC, are RECAD and the Agency Disclosure Office Policy forms required? Is a brokerage agreement (i.e., a Buyer Agency Agreement or Transaction Facilitator Agreement) required?

A4: Under Ala. Code § 34-27-82(d), licensees are not required to provide the RECAD Brokerage Services Disclosure Form or the Agency Disclosure Office Policy (ADOP) when working with certain entities, including limited liability companies (LLCs), corporations, partnerships, trusts, and governmental entities in real estate transactions. However, a brokerage may have policies requiring these disclosures even when they are not required by law. That being said, a brokerage agreement (i.e., a Buyer Agency Agreement or Transaction Facilitator Agreement) is required before an offer may be prepared or submitted on behalf of a buyer, regardless of whether the buyer is an individual or an entity. (The same rules apply for sellers, and a brokerage agreement is required before a seller’s property can be placed on the market.) For more information about the documents required under the RECAD, visit AAR’s RECAD Resources Page.