A Note From The Legal Helpdesk: Queries From The Field
November 28, 2017
You asked. We answered. Here are some of the questions received and answers provided by the Alabama Realtors® Legal Helpdesk. Also included are some examples of what the Legal Helpdesk cannot answer. Thank you to everyone who submitted questions. You can submit new questions here!
Divorce and Closing
Q: A seller of a home is going through a divorce. The property is not the homestead and the seller’s spouse is not on the deed. Can the seller sign the closing?
A: When a property is titled in a person’s name and the property is not a homestead, consent by the spouse is not required in order for the owner to convey title. See Ala. Code § 6-10-3. In this situation, the deed conveying the property usually states that the property is not a homestead (consult your closing attorney). Also, the divorce proceedings may have an impact on the proceeds from the sale.
Effect of a Party's Death on a Contract
Q: I have a rental agreement with a landlord, who recently passed away. I have not disbursed funds for this month. I have a family member who will be executor of her estate, I do not wish to continue management. Please advise the correct way to disburse funds. Also, did the death terminate the management agreement?
A: In general, a contract, like the management agreement, is not necessarily terminated because a party to the contract passed away. Contracts terminate upon death when the contract states it or when a party’s performance under the contract is considered necessary to fulfilling the contract’s provisions. This generally occurs with personal service contracts. So, this question must be determined on a case-by-case basis depending on a contract’s terms and the specific parties to a contract.
Regarding disbursement of rental funds, keep in mind that Alabama Real Estate License Law places specific requirements on handling funds from others. Premature or improper disbursement can result in license law violations. Generally, the executor or executrix will file the deceased’s will, if the deceased has a will, with the proper court. If the contract was directly with the landlord and not a company, the funds may be tied up in the administration of the deceased’s estate (assets, debts, etc.). In this situation, contact the Alabama Real Estate Commission for guidance on the monthly disbursement.
Real Estate License – When Needed
Q: If a builder (general contractor) builds several new homes in a subdivision for an investor, does the builder need a real estate license to sell the homes for the investor? Or, if the investor has a secretary in an office that can handle public questions about the homes and facilitate the sale, can that be done without a license since the secretary works for the investor?
A: We will look at the builder and the secretary in turn. Alabama law, specifically section 34-27-2(b) of the Code, sets out the exceptions to the real estate license requirement. A builder or general contractor, who does not own the home(s), is not exempt and must have a real estate license. The secretary may provide certain services but must be careful not to violate the law. Some examples of what the secretary can do are on the Alabama Real Estate Commission’s website – link here. Scroll down to the second heading, “UNLICENSED ASSISTANTS”, where you will find a non-exclusive list of permitted, non-licensee activities.
It is important to note that even an investor may need a real estate license. The license law exempts the owner of real estate, but, when a company owns real estate, only certain persons within the company are considered “owners.” Alabama Admin. Rule 790-x-1-.03(1) defines corporate owners as “a partner or corporate officer, who has authority to and does make management decisions affecting the overall policy of the corporation or partnership.”
“Disclaimer: This article provides general information only and does not constitute legal advice. No attorney-client relationship is created by reading, viewing, opening, or other action related to this article. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Specific circumstances may change the applicable law or advice a competent individual would provide. In addition, this information is not meant to supplant or in any way replace Errors and Omissions Insurance or other insurance coverage. Mistakes may occasionally be made. Once notified, we will work diligently to correct the issue in a timely manner and mark any updated or changed articles accordingly.”