Alabama’s Real Estate Consumer Agency Disclosure Act (RECAD) is a part of Alabama license law that helps educate consumers about representation types available in Alabama and from a particular company, ensure that the type of representation selected by the consumer is reflected in a formal agreement, and protect consumers in Alabama real estate transactions. Compliance with RECAD is a critical component of abiding by Alabama license law, so AAR’s Legal Team has created this page to help you approach RECAD with confidence and ease.
This page is for information only and does not constitute legal advice. If you need legal advice, please seek guidance from retained counsel.
Where to Find RECAD
RECAD is a series of laws that are found within Alabama real estate license law. Specifically, RECAD begins at Ala. Code § 34-27-80 and extends to Ala. Code § 34-27-88.
Required Documents
RECAD requires use of several documents when working with Alabama consumers:
- RECAD Brokerage Services Disclosure Form – A form created by the Alabama Real Estate Commission (“AREC”) that licensees may not amend. It outlines the representation types that are legal to offer in Alabama. It’s a disclosure, not a contract. The text of the RECAD Brokerage Services Disclosure Form comes from Alabama Admin. Rule 790X-3-.13.
- Agency Disclosure Office Policy – A form created by each Alabama licensed company. It outlines the representation types that the company offers, as well as basic information about how the company is compensated. It’s also a disclosure, not a contract.
- Brokerage Agreement – A brokerage agreement is a contract between the licensee and consumer that outlines what services will be provided, the licensee’s compensation for those services, and other details about the arrangement. The term “brokerage agreement" includes both agency agreements and transaction facilitator agreements.
- Agency Disclosure for Purchase Agreement – A mandatory disclosure that must be included in all purchase agreements for transactions which Alabama licensees are involved with. It notifies all parties who represents both the buyer and seller, and what type of representation relationship they have. The disclosure’s text is mandated by Ala. Code § 3427-82(i) and cannot be changed.
Timing
The RECAD Brokerage Services Disclosure Form and Agency Disclosure Office Policy must be given to the consumer at the same time. Specifically, they must be given “as soon as reasonably possible and before any confidential information is disclosed.” (Ala. Code § 34-27-82(c)). Practically, this means that licensees should give both disclosures to consumers at their initial contact. However, licensees are not required to provide these forms to prospective buyers who simply attend an open house.
Alabama licensees are required to have a signed brokerage agreement in place with sellers before they’re allowed to list the seller’s property for sale. When working with buyers, a signed brokerage agreement is required before submitting an offer to purchase on the buyer’s behalf. (NOTE: The National Association of REALTORS® has enacted requirements related to brokerage agreements with buyers. For questions about these requirements, please contact the Legal Line.)
The Agency Disclosure must be included in any finalized purchase agreement that involves a consumer who is represented by a licensee. If a licensee receives an offer to purchase that doesn’t include the Agency Disclosure, or includes an outdated Agency Disclosure, it is their responsibility to add the correct Agency Disclosure using a counteroffer, addendum, or updated contract.
Exceptions
Licensees are not required to provide the RECAD Brokerage Services Disclosure Form or Agency Disclosure Office Policy when they’re working with:
- any corporation,
- nonprofit corporation,
- professional corporation,
- professional association,
- limited liability company,
- partnership,
- any partnership created under the Uniform Partnership Act, commencing at Section 10-8A-101,
- real estate investment trust,
- business trust,
- charitable trust,
- family trust, or
- any governmental entity in transactions involving real estate.” (Ala. Code § 34-27-82(d)).
However, companies may set a policy which requires providing the disclosure documents to these types of entities, or a licensee may voluntarily choose to provide them.
Agency Disclosure Office Policy
In addition to providing the Agency Disclosure Office Policy to consumers, every licensee in a company must be given a copy of the document annually. (And if the document is updated, licensees must be given a copy of the updated document.)
Licensees are required to sign a copy of the document to acknowledge that they’ve received it, and companies must keep the signed copies on file for at least 3 years.
Obligations of Licensees
One section of RECAD (Ala. Code § 34-27-84) lists several obligations of all real estate licensees in Alabama. Specifically, they are:
- To provide brokerage services to all parties to the transaction honestly and in good faith;
- To exercise reasonable skill and care in providing brokerage services to all parties;
- To keep confidential any information given to the licensee in confidence, or any information obtained by the licensee that the licensee knows a reasonable individual would want to keep confidential, unless: (i) disclosure of this information is required by law, (ii) the disclosure is authorized by the party in writing; (iii) the information becomes public knowledge; or (iv) failure to disclose the information violates a fiduciary duty to a client;
- To account for all property coming into the possession of the licensee that belongs to any party to the real estate transaction;
- When assisting a party in the negotiation of a real estate transaction, to present all written offers in a timely and truthful manner; and
- To act on behalf of the licensee or his or her immediate family, or on behalf of any other individual, organization, or business entity in which the licensee has a personal interest only with prior timely written disclosure of this interest to all parties to the transaction.
Moreover, the same section of RECAD states that licensees listing a property for sale have the following responsibilities, at a minimum: “accept delivery of and present to the consumer all offers, counteroffers, and addenda to assist the consumer in negotiating offers, counteroffers, and addenda, and to answer the consumer's questions relating to the transaction.”
Services Licensees Are Required to Provide to Clients
Another section of RECAD (Ala. Code § 34-27-85) lists services that licensees are required to provide to clients, in addition to any other services that they may agree to in an agency agreement:
- Loyally represent the best interests of the client by placing the interests of the client ahead of the interests of any other party, unless loyalty to a client violates the duties of the licensee to other parties under Section 34-27-84, or is otherwise prohibited by law;
- Disclose to the client all information known by the licensee that is material to the transaction and not discoverable by the client through reasonable investigation and observation, except for confidential information as provided in Section 34-27-84(a)(3). A licensee shall have no affirmative duty to discover the information; and
- Fulfill any obligation required by an agency agreement, and any lawful instructions of the client that are within the scope of the agency agreement, that are not inconsistent with other duties as enumerated in this article.
Regarding dual agents, the same section states that licensees still owe the above duties to each client, unless fulfilling the duties to one client violates their fiduciary duty to the other client. It also reiterates that prior written, informed consent (in the form of a dual agency agreement) is required before a licensee may serve as a dual agent.
All About RECAD
This short video reviews the information about RECAD listed above.
Reviewing RECAD With Consumers
Are you struggling with talking to consumers about the RECAD Brokerage Services Disclosure Form and your Agency Disclosure Office Policy? AAR’s Legal Team created this video to help. Feel free to show the video to consumers to break the ice and begin the conversation.
RECAD at a Glance
We've created a short summary of the information listed about that you can keep on hand. Click below to download and print the guide.
Decision Tree
A step-by-step scenario-based guide that walks licensees through how RECAD applies in real-world interactions with consumers – from initial contact through formation of a brokerage relationship.
The Decision Tree breaks down when disclosures are required, when a written agreement is required, and how a licensee’s role changes between transaction facilitator and agency agreement (single, designated, or dual agency).
If you have questions about how license law changes will impact the home buying process, contact the Alabama REALTORS® Legal Line.
One-Page RECAD Field Guide
This condensed, reference tool summarizes the RECAD decision-making process into a single workflow.
The Field Guide is designed for quick use during real estate interactions and highlights the key decision points:
- whether a written agreement exists,
- what role the licensee is operating in, and
- what duties apply.
This resource strips away the detailed explanations of the RECAD Decision Tree and focuses on clear directional guidance.
Sample Agency Disclosure Office Policy
If you’re a qualifying broker who isn’t sure where to start with writing your Agency Disclosure Office Policy, this resource was made for you.
It outlines what information must be included in the document and provides some basic language to help kick things off.
The sample language isn’t set in stone – feel free to adjust or amend it to make it match your company and writing style.