The Alabama legislature completed its tenth week in action last week, and just five legislative days remain as the only must-pass bills – the state budgets - near final approval. The Education Trust Fund lacks only concurrence in the Senate after changes in the House, while the General Fund budget must pass the Senate and return to the House if the Senate amends it, as is likely. REALTOR® priority bills continue to progress with three bills lacking one step toward final passage and another on the calendar today. 

A bill changing the standard for judicial review of state agency rules awaits consideration by the House of Representatives. Passing the Senate unanimously last week, SB 248, sponsored by Sen. Arthur Orr (R-Decatur), is was prompted by a recent U.S. Supreme Court opinion that overturned a long-held doctrine of judicial deference to agency action, called Chevron deference. The bill follows the Supreme Court opinion in setting the judicial review standard as de novo, which means that the facts and merits of the case will be fully adjudicated by the court with no extra deference to agency action. The Supreme Court holding was heralded as a win for taxpayers and businesses. While state agency action has not risen to the level of difficulty as federal regulatory action, the bill would help prevent Alabama’s businesses from being subject to egregious regulatory burdens.

SB 233, sponsored by Sen. David Sessions (R-Grand Bay), passed the Senate with a unanimous vote. The bill will add two consumer members to the Ad Valorem Advisory Committee, a committee established several years ago and comprised of local tax collecting officials and the Department of Revenue. While the committee is strictly advisory and has no authority, two consumer members will ensure taxpayer interests and concerns are represented in its work and recommendations.

The Senate passed legislation meant to encourage economic development through the funding of energy infrastructure projects. SB 304, sponsored by Sen. Orr, would allow the state to borrow up to $1 billion to provide loans or financial assistance for energy infrastructure projects. The focus of the funds would be on the power lines and poles, transformers, and other equipment necessary to power an economic development project. Under the bill’s provisions, 40% of the funds would first be available to rural projects, or projects with populations fewer than 135,000. 

SB 304 now moves to the House. 

Noted earlier this year as Real Estate Bill 2 (see here), companion bills, SB 212 and HB 382, are identical measures that have one final step before final passage. 

As amended, SB 212 and HB 382 do the following:

1. Failed Payments to AREC - Bad Checks/Incorrect E-payment Numbers: The bill allows failed payments to be handled administratively rather than requiring a full hearing by AREC. With the extensive use of electronic payments for license fees and other charges, licensees who inadvertently input the wrong account or routing numbers find themselves in violation of current law and subject to a hearing before the full Alabama Real Estate Commission. The bill will keep these administrative oversights from requiring a full hearing. 
2. RECAD/Dual Agency Changes: In line with many other states, the bill changes the definition of a dual agent, limiting it to when one agent represents both sides of a transaction and not when two independent agents in one company represent opposite sides. Real estate agents are predominantly independent contractors, and the change will ensure that each agent owes the full fiduciary duties exclusively to their respective client, rather than the more limited responsibilities of dual agency. The bill also tweaks the definition of “agency agreement” to reflect the designation by the qualifying broker. 
3. Sets Parameters for Co-Brokerage Agreements with Out-of-State Brokers: The amendment added specific requirements and limitations on out-of-state co-brokerage agreements for Alabama transactions, including setting the max number at three transactions per year, with a portfolio of properties equaling one transaction, a $50,000,000 maximum in transaction volume per year, and requiring the Alabama broker to supervise the actions of the out-of-state broker.
4. Reasonable Regulation for Teams: Recent years have seen more widespread use of real estate teams or groups, in which real estate agents work together under a specific name that is a sub-group within a real estate company. The bill sets a basic definition for teams, reasonable rules on advertising, and clarifies broker responsibilities for teams to promote clarity to consumers and ensure professionalism by the team or group. The bill expressly prohibits additional licensing or registration by teams or team members.
5. Use of Branch Offices: Current law has an antiquated prohibition on real estate agents using any branch office to meet clients other than the physical office where their license is held. The bill lifts that prohibition to allow agents to use any office of their brokerage.   
6. Increases the Maximum Fine from $2,500 to $5,000: Current law has set the maximum amount a licensee can be fined at $2,500 per violation. Through the years, the maximum fine has become less of a deterrent for bad conduct and license law violations. The bill increases the maximum fine from $2,500 to $5,000 that can be imposed by the Alabama Real Estate Commission.  

SB 212 and HB 382 now await consideration by the opposite chamber. If passed into law, the measures would take effect in October 2025. 

The third real estate bill, HB 225, passed out of Senate committee unanimously with the agreed upon changes. AAR worked with the bill sponsors and AREC to reach the compromises contained in the bill, which now awaits final passage in the Senate.

The amended HB 225 makes changes to real estate education and licensure requirements focusing on four broad categories:  

1. Education Updates: The bill updates definitions; increases the fine for license law violations by schools, administrators and instructors from $2,500 to $5,000; inserts accountability measures for pre-license schools if their students fail taking license examinations; codifies continuing education for instructors; codifies a renewal and inactive process for educators and schools; and creates a process for the commission to approve distance education for pre-license and continuing education.
2. Enhanced Licensure Requirements: The bill increases the requirements to obtain a real estate salesperson (i.e. agent), broker, and qualifying broker license. The increased requirements are mainly a higher number of hours necessary to obtain each license, and increasing the years a person must be in the business before being able to fill the supervisory role of qualifying broker. The bill also requires a licensee on inactive status (i.e. not working as a licensee) to retake certain courses if inactive for a long period of time to ensure they remain up-to-date on legal requirements.
3. Operational Clarifications: The bill updates the code in several areas to make it easier for licensees to do business, such as allowing a licensee to meet clients at any office of its company and updating the process for a company to have a temporary qualifying broker when the permanent qualifying broker is unable to perform his or her duties.
4. Streamlines Statutory Language and Processes: Because real estate license laws are extremely confusing and often overlap, the bill updates definitions, deletes redundant language, and moves language between sections to improve readability and flow.

Education Budget Passes – The bills comprising the education budget package passed the House on Thursday, but the main spending bill must return to the Senate for concurrence before going to Gov. Kay Ivey’s desk for signature. The education budget package represented a record $12.1 billion in spending on K-12 public schools, community colleges, and four-year universities. A few key components include an additional $80 million for school choice, a reworked formula for per student allocation to schools to provide more funding for students with additional needs, and an increase in per monthly contributions for employee health insurance.

Birmingham Water Works Bill – A bill to restructure the Birmingham Water Works Board caused a stir several weeks ago when it was filed, but, ultimately, a compromise was reached, resulting in the bill passing the Senate with little fanfare and no fireworks last week. The bill will give surrounding counties that are serviced by the utility more of a voice on the board. The amendment adds two more board members, bringing the total to seven.

Ready-to-Drink Bill – A bill allowing “ready-to-drink” spirits — mixed drinks in a can — to be sold with beer and wine at grocery stores passed the House last Tuesday with a 68-25 margin and now goes to the Senate for consideration. 

The House and Senate reconvened today at their normal times of 1 p.m. and 2 p.m. respectively. The Senate was expected to take up the General Fund budget and accompanying bills. The House had a long slate of House bills to cover as today is the last day to transmit legislation to the opposite chamber except by unanimous consent.