AAR reviewed a new regulation recently proposed and published by the Alabama Real Estate Commission (AREC). AAR submitted a comment letter providing feedback and requesting additional consideration on the proposed rule change.

The letter can be found below. 

Dear Vaughn:

On behalf of the Alabama REALTORS® (AAR), we were encouraged by the substantial progress made this legislative session on a broad range of improvements to real estate license law. Over the past 18 months, national developments have created challenges for real estate professionals, their business practices, and consumers. These developments have created a legal minefield and compounded existing complexities in the real estate industry.

We appreciate the Alabama Real Estate Commission’s (AREC) efforts and making AREC’s legal counsel available prior to the start of the legislative session, as we sought AREC’s input on AAR’s proposed legislation for practical challenges related to regulatory enforcement. AAR’s HB 230^[1] and AAR’s HB 382^[2] were important improvements to license law and AREC’s HB 225^[3] was a similarly important enhancement to education and licensure requirements.

AREC Pending Rule Proposals

AREC has recently discussed several upcoming rule amendments to existing regulations concerning Agency/ Brokerage Services Disclosures (Rule 790-X-3.13); Advertising Teams (Rule 790-x-3-16); and a new proposed rule 790-x-3-17 concerning Agreements to Show Property. We anticipate further comment on any amendments to existing rules once published. With respect to proposed new Rule 790-x-3-17, we respectfully bring to your attention our concerns and areas for additional consideration with the proposed rule.

AREC’s Proposed Rule 790-x-3-.17; Agreements to Show Property

We understand the intention behind the proposed rule, 790-x-3-.17, discussed during April’s AREC meeting^[4]  may be to accommodate some companies or franchises who have adopted a business model that requires their licensees to enter into a buyer agreement as a condition of showing a property. However, we believe that if implemented, this rule will create more challenges than it addresses, particularly for consumers and real estate professionals. Specifically, we are concerned that it will:

• Confuse consumers,
• Confuse real estate professionals,
• Cause unfair treatment to consumers,
• Contradict existing state law, and
• Lead to additional unnecessary legal exposure for real estate professionals.

For these reasons, we respectfully request that AREC withdraw or table the proposal for further review and reconsideration.

Key Concerns:

1. AREC’s Proposed Rule Directly Contradicts State Law

Alabama law (Code of Alabama, 1975 § 34-27-82) states that a consumer or customer may not be required to enter into a written brokerage agreement to view a property.^[5]  AREC’s proposed rule^[6] attempts to contradict this law by suggesting that brokers can refuse to show property to a consumer unless they enter into such an agreement. This undermines the statutory language and intent and may face opposition from the Alabama Legislature and the Courts. State law preempts and supersedes the administrative rules of a state licensing board. Furthermore, encouraging a statewide mass boycott by real estate brokers and agents of consumers who refuse to sign a buyer’s agreement further undermines existing state law and federal antitrust laws. (See bullet point 4)

 

2. Anti-Consumer Implications

In general terms, we believe buyer agreements can be a positive tool when they clearly outline the terms of representation and set mutual expectations between the consumer and the licensee. The key issue is how these agreements are introduced and executed. Are consumers being empowered to make informed, independent decisions about representation, or are they being pressured or coerced into signing an agreement against their will? The difference lies in respecting the consumer’s autonomy and ensuring the agreement is built on an arm’s length, independent negotiation after the parties have had an opportunity to build trust and a relationship.

The proposed rule effectively pressures consumers into signing a buyer agreement before they are even shown properties. This could potentially harm consumers by limiting their freedom to explore real estate options without undue coercion. The United States Department of Justice (DOJ) has expressed reservations about the forced use of buyer agreements and the potential anti-competitive effects from it.^[7] We take such guidance from the DOJ very seriously. The irony of the rule proposal is that AREC’s mission is consumer protection, and this rule proposal is a pro industry protection attempt to guarantee compensation to real estate professionals to the detriment of the consumer.

3. Increased Fair Housing Violations

The proposed rule allows brokers and agents to refuse service to consumers who are unwilling to sign a buyer agreement. These are conditions that are solely based on compensation and forcing or coercing consumers into written buyer agreements. This issue is ripe for abuse to the detriment of consumers. Real estate professionals are bound by federal fair housing laws and rules. Uniform application of office policies like when to accept a potential customer or client is a large component of ensuring fair housing compliance. This policy may lead to discriminatory practices, particularly with minority consumers, as was seen in the Newsday^[8]investigation of Long Island real estate agents who engaged in widespread discriminatory practices such as steering and unequal treatment of minority consumers during the home buying process. The risk of increased fair housing violations from AREC’s proposed rule is significant, and we urge AREC to reconsider how this rule could affect equitable treatment of consumers in Alabama.

4. Violation of Federal Antitrust Laws

AREC’s legal counsel provided guidance that encourages brokers to adopt a statewide, group boycott of consumers who refuse to sign a buyer agreement during AREC’s May 1, 2025, Briefly Legal.

“What should be happening across all over the state of Alabama is every company should be saying that…that we’re not willing to show you a property if you’re not willing to sign a[n] [buyers] agreement.”^[9]

This guidance could be interpreted as anti-competitive behavior under the Sherman Antitrust Act and invite federal antitrust scrutiny as a restraint of trade. This comes at a time where the industry is in the crosshairs of the U.S. Department of Justice and other groups interested in anti-trust enforcement.

While AREC, as a state licensing board, may have some argument for immunity from antitrust scrutiny, brokers and agents involved in following AREC’s request for a group boycott of consumers would not. Notably, the 2015 United States Supreme Court case North Carolina State Board of Dental Examiners^[10] clarified that a state licensing board is not entitled to state action antitrust immunity against antitrust claims when market participants^[11] comprise the majority of the state licensing board. We are concerned that the guidance and proposed rule will place unneeded scrutiny on Alabama’s licensees, including commissioners. We understand mistakes and misspeaking during a webinar, but we urge AREC to rescind this proposed rule and reconsider its guidance to avoid potential antitrust legal challenges for itself and the brokers and agents who may follow this misguided counsel.

5. Does Not Solve Intended Problem - Forced Buyer Agreements Do Not Guarantee Compensation

We strongly support full and fair compensation for our REALTOR® members who provide outstanding service, expertise, and value to property buyers across Alabama. We hope every buyer chooses to work with an Alabama REALTOR® throughout their transaction. However, that choice must be freely made by the consumer- not forced through coercive or blanket mandates.

Those services and compensation must be negotiated at arm’s length with the consumer before moving forward with the essential elements of a legally binding contract. There must be a valid offer, valid acceptance, valid consideration, and a meeting of the minds to have a legally enforceable contract between a consumer and licensee. Any agreement signed under duress, undue pressure, or as a mandatory precondition to service risks being deemed invalid, voidable, and unenforceable.

The AREC rule aims to guarantee compensation for licensees by coercing consumers into buyer agreements (or calling for a mass group boycott of licensees across the state to refuse service to consumers unless they sign a buyer agreement guaranteeing compensation). This approach is unlikely to achieve its intended result and raises legal concerns.

The belief that a licensee will be “guaranteed” compensation or payment by coercing a consumer to sign an unenforceable contract prior to showing is misplaced and a myth. A buyer agreement signed under duress does not guarantee compensation for simply showing a property without any further fiduciary or transactional activity by the licensee.

Furthermore, the proposed rule does not consider emerging consumer behavior following the 2024 National Association of REALTORS® (NAR) settlement. That settlement required all REALTOR® members enter into a buyer agreement prior to a property showing. Licensees and consumer advocacy groups report that following this rule change, consumers either (1) refused to sign an agreement or (2) signed multiple exclusive buyer agreements with multiple licensees, with no intention of working with the licensee beyond the initial property showing. When a consumer has signed multiple exclusive buyer agreements with multiple licensees, it is difficult to know which licensee(s) owe a duty to the consumer, and similarly difficult to determine the enforceability of the various buyer agreements. This forced arrangement is a disservice to the consumer and the licensee.  

Forcing consumers into buyer agreements does not ensure clarity, compensation, or enforceability. It creates uncertainty, erodes consumer confidence, and may harm both consumers and licensees. At the time of this writing, we are not aware of any successful litigation in Alabama where an agent has recovered compensation solely on the basis of showing a property under a buyer agreement.

6. Procedural Concerns

It appears that the proposed rule may have already been decided behind closed doors, prior to the public comment period ending on July 4, 2025. On June 5, 2025, AREC’s education department distributed advisory materials suggesting the rule was in the approval process. The excerpt from the materials is highlighted below. We appreciate the effort to help educate real estate instructors about impending changes in license law, but we would encourage AREC and its staff to not provide guidance before it is finalized. This undermines the public comment process and creates confusion as to the specific language of the rule.  

Recommendations:

We respectfully request the following revisions:

• Withdraw or table the rule for further discussion, as it conflicts with existing law and creates numerous unintended legal consequences and unfair treatment of consumers.Future opportunities to clarify guidance for real estate agents will benefit from time to reflect on the best and most legally responsible path forward with the fewest unintended consequences and least amount of confusion.
• Avoid encouraging a mass group boycott by real estate professionals of consumers who do not want to sign a buyer agreement or encouraging coercion of consumers into signing agreements that could lead to anti-trust and fair housing violations.
• In the alternative, to the extent the proposed rule is deemed necessary, we recommend the rule be amended to accommodate the concerns above and include other aspects of property showings and working with consumers. The proposed language can be found below.

“Code of Alabama, 1975§ 34-27-82 states a consumer or customer may not be required to enter into a written brokerage agreement for a licensee to show a property to the customer or consumer, and also states that a licensee must enter into a written agreement prior to listing a property or submitting an offer. The following rule aims to provide additional clarity related to property showings and working with consumers:

1. Although a consumer or customer cannot be required to enter into a written brokerage agreement for a licensee to show a property to the consumer or customer, the consumer or customer may still voluntarily elect to sign a buyer agreement prior to a property showing. That decision must solely rest with the consumer free from duress, pressure, or coercion.
2. Real estate agents have the right to take reasonable steps to protect their personal safety and professional integrity when interacting with prospective clients or consumers and showing properties. To that end, agents may:

• Refuse to schedule or to conduct a property showing or work with a consumer due to personal safety concerns, including the lack of verification of a prospective client’s identity.
• Require prospective clients to provide valid legal identification prior to a showing or working with a consumer.
• Require a pre-qualification or pre-approval letter prior to a showing or working with a consumer.
• Conduct a background check as a condition of showing or working with a consumer.
• Require that the initial meeting with a prospective client take place at a public location or real estate office before a showing or working with a consumer.
• Refuse to work with a consumer for any reasonable business purpose.

3. Real estate professionals are encouraged to maintain clear policies, apply them evenly and uniformly, and communicate them professionally to consumers.”

We appreciate the opportunity to provide feedback on the proposed rule during the allowable public comment period. Should you have any questions, require further clarification, or if we can be helpful, please do not hesitate to reach out.

Warm regards,                         

Jeremy Walker                                      Wes Grant

Chief Executive Officer                   Chair of AAR’s License Law Workgroup