The Alabama Real Estate Commission (“AREC”) held its ninth meeting of 2026 on October 22 in Montgomery, Alabama. All commissioners were present except Commissioner Randy McKinney. Commissioner Terri May’s term ended on September 30, 2026, and she has elected not to return for the remainder of the year. 

Executive Director Vaughn Poe provided an update on license renewals and new license applications. Approximately 36,894 licenses have been renewed, with 97% of renewals taking place online. Poe also reported that AREC issued approximately 200 new licenses in September.  

The meeting included five formal hearings involving various violations of Alabama real estate license law. Two matters highlighted the requirements for accounting for security deposits following the termination of a property management agreement, reporting certain lawsuits to AREC, and maintaining required transaction documentation when conducting real estate activities across state lines.   

One disciplinary matter involved a property management company that failed to provide an accounting of security deposits within seven (7) business days following the termination of a property management agreement. The matter also involved the qualifying broker’s failure to notify AREC of a lawsuit arising from the dispute over the security deposit. 

Under Rule 790-X-3-.03(c), when a landlord or qualifying broker terminates a management agreement for leased property, the qualifying broker must provide an accounting of all security deposits, prepaid rents, and other related escrow funds to the landlord or new property manager, along with payment of those funds, within seven (7) business days of the management termination’s effective date. 

In this case, the required accounting was not provided within the seven-business-day period, and a lawsuit was subsequently filed concerning the security deposit. The qualifying broker also failed to notify AREC of the lawsuit, as required by Ala. Code § 34-27-36(j). 

Under Ala. Code § 34-27-36(j), licensees must notify AREC within ten (10) days after receiving notice of a civil summons and complaint involving a real estate transaction or the goodwill of an existing real estate business. The notification must be submitted in writing by certified mail and include a copy of the summons and complaint. Under Ala. Code § 34-27-36(k), licensees are also required to notify AREC within ten (10) days of receiving notice that such a civil action has resulted in a judgment or dismissal. 

The Commission found the licensee in violation of each of the applicable provisions and imposed fines for each count. This case serves as a reminder that a qualifying broker’s responsibilities do not necessarily end when a property management agreement is terminated or transferred. Qualifying brokers should have procedures in place to ensure that security deposits and other escrow funds are properly accounted for and transferred within the required timeframe. Additionally, licensees should be mindful of their obligation to report certain legal proceedings to AREC, even when those proceedings arise from a dispute involving a former client or management relationship. 

Another disciplinary matter involved a licensee who also held a Georgia real estate license whose Alabama transaction files were missing documentation required under Alabama real estate license law. Specifically, the files lacked Real Estate Brokerage Services Disclosures (RECAD) and estimated closing statements. 

During the hearing, differences between Georgia’s and Alabama’s transaction documentation practices were discussed. However, regardless of the procedures a licensee may be accustomed to following in another state, real estate transactions conducted in Alabama remain subject to Alabama’s licensing laws and regulations. 

Under Ala. Code 34-27-82(c), licensees must provide the required RECAD disclosures to consumers. Additionally, Rule 790-X-3-.04 requires estimated closing statements to be provided and signed by the consumer in accordance with the rule’s requirements.

The Commission found the licensee in violation of both provisions and imposed fines for each violation. The Commission also ordered the licensees to complete a Broker continuing education course and Risk Management continuing education course in person, in Alabama, with no continuing education credit awarded for either course.

This case serves as a reminder that holding a license and primarily conducting business in another state does not exempt licensees from complying with Alabama’s requirements. Licensees conducting business across state lines should familiarize themselves with the laws and regulations of each state in which they are licensed and ensure their transaction procedures account for differences in documentation and recordkeeping requirements. 

If you have questions about these topics and are an Alabama Association of REALTORS® member, please contact the Legal Line.