Alabama REALTOR® Judicial Monitor
October 30, 2018
The Public Policy Team monitors Alabama’s courts for impacts on the real estate industry and property laws in general. When noteworthy events occur, or important opinions are released, summaries and analysis of the cases will be provided as the Alabama REALTORS® Judicial Monitor.
For the second edition of the Judicial Monitor, we review four cases including a DOJ enforcement action against a landlord for violations of the Servicemembers Civil Relief Act, a DOJ/SEC enforcement action against a Virginia real estate developer, a case on a real estate auctioneer’s fiduciary duty to report verbal offers, and a recent opinion issued by the Alabama Supreme Court regarding inverse condemnation.
I. U.S. Department of Justice Enforcement Action against Nebraska Landlord for Violations of Servicemembers Civil Relief Act
If a servicemember terminates his or her lease early pursuant to military orders, a landlord is prohibited under SCRA from charging early termination fees. Violations of that law can incur significant financial penalties.
II. U.S. Department of Justice, U.S. Securities and Exchange Commission Charge Virginia Real Estate Developer with Fraud
- The DOJ and the SEC have jurisdiction over violations of the federal securities laws. In Alabama, the Alabama Securities Commission (ASC) can also investigate and prosecute securities law violations against Alabama investors.
- Along with financial instruments like stocks and bonds, investments in real estate can implicate the state and federal securities laws.
III. James Woods Development Inc., v. Granger Thagard and Associates
There was sparse legal reasoning given by any judge in this case. The holding appears to say that if a seller’s agent fails to convey a verbal offer to the seller and the property ends up selling for less than the verbal offer’s amount, the seller’s agent could be held liable for breach of fiduciary duty.
The Code of Ethics and Alabama’s license law are vague on verbal offers. Alabama’s Statute of Frauds does require that all agreements for the sale of land to be written, but this only controls binding purchase agreements, not offers. Offers are mentioned twice in Alabama’s license laws. In one place, the law requires agents “to present all written offers in a timely and truthful manner” “when assisting a party in the negotiation of a real estate transaction.” Ala. Code § 34-27-84(a)(5).[ix] However, in that same section, the law requires the listing broker, or his or her agents, to “accept delivery of and present to the consumer all offers, counteroffers, and addenda.” Ala. Code § 34-27-84(c).[x]
The REALTOR® Code of Ethics simply provides that REALTORS® must convey offers and counter-offers, but does not specify written or verbal. Article 1, Standard of Practice 1-6.
IV. Portersville Bay Oyster Company, LLC, et al. v. Blankenship (Ala. 2018)
- There does not have to be a statute authorizing an inverse condemnation claim for a specific category of property to make a claim for such property.
- An easement from the state doesn’t negate your property rights on the easement. In this case, while some of the oyster farmers were leasing their right to farm on a shellfish easement from the Department of Conservation and Natural Resources, that didn’t mean they had no right to compensation if the state damaged the oysters they grew.
- The Legal Helpdesk has written several articles on takings law. The article on inverse condemnation can be viewed here, and the article on eminent domain can be viewed here.
[i] 50 U.S.C. §§ 3901-4043.
[ii] See 50 U.S.C. § 3955.
[iii] 15 U.S.C. § 77a et seq.
[iv] 15 U.S.C. § 78a et seq.
[v] 15 U. S. C. § 80b-1 et seq.
[viii] U.S. Department of Justice Press Release: https://www.justice.gov/usao-edva/pr/fairfax-man-arrested-16-million-securities-fraud-scheme.
[ix] The regulations issued by the Alabama Real Estate Commission reiterate that sub-section stating that “[a] real estate licensee who is acting as an agent for a principal shall transmit to his principal all written offers received regarding the property under consideration.” Rule 790-X-3-.08.
[x] REALTORS are also required to “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 information they are prohibited from disclosing due to confidentiality requirements. Ala. Code § 34-27-85(a)(2); see also Ala. Code § 34-27-84(a)(3).
[xi] Plaintiff’s motion in opposition to summary judgment, pp.2.
[xii] Ala. Code § 9-12-22.
[xiii] 395 So. 2d 65, 67 (Ala. 1980).
[xiv] Denson v. Alabama Polytechnic Institute, 126 So. 133 (Ala. 1930).