Note: This article is intended for information only and is not intended as legal advice. No attorney-client relationship has been established. If you need legal advice, please contact a qualified attorney.

The Legal Line is a free resource available to Alabama REALTORS®. Below are some recent questions submitted and their responses. If these questions spark a question for you, please contact us!

Q1: This question is related to the places in the AAR Purchase Agreement that have an “or” option, such as the financing contingency (either cash or financed transaction) and the inspection contingency (either no inspection contingency or inspection contingency requested). Do the consumers have to initial under the section that they don’t use? For example, if it’s a financed transaction, do the consumers have to initial under the cash transaction section?

A1: No, the consumers are only required to initial under the sections which apply to the transaction.

Q2: Are individual licensees required to obtain a business license in the places they work?

A2: No, individual agents are not necessarily required to have their own business license – just the company, unless the individual agents operate as a company, such as an LLC. This may occur when a salesperson or associate broker starts an LLC and receives commission payments through the LLC, which is allowed under license law. Specific to real estate, Alabama law was changed several years ago to only allow cities to charge business licenses to real estate companies or individual licensees operating as a company (i.e. LLC) where the company or licensee has a physical office. Just this past year, the law was changed again to allow anyone charged a business license to appeal the charge to the Alabama Tax Tribunal. If you need a copy of the document where this guidance comes from, please see Page 72 of the Alabama Handbook of Privilege and Store Licenses.

Q3: Are strikethroughs allowed on a Purchase Agreement? In other words, may I mark through terms of the Purchase Agreement during negotiations and write in new terms, or do I have to use a Counteroffer Form?

A3: Strikethroughs are legally permitted but aren’t preferred in most cases. They can be difficult to follow, which can create confusion and potentially void the contract (remember, there must be a meeting of the minds). Counteroffer Forms are safer because they create a clearer record of the consumers’ negotiations.

Q4: I know Alabama license law now requires a written Referral Agreement for any referrals that take place in the state. What if I receive a referral from a licensee in another state? Is a written agreement still required?

A4: Yes. Although the state where the other licensee comes from may not require a written Referral Agreement, Alabama license law requires one for any referrals made or received in the state.