The Alabama Real Estate Commission (“AREC”) held its third meeting of 2026 on March 19th in Montgomery. AREC continues to receive an average of more than seven new license applications per day – notably, applications received this year are up nearly 25% compared to the same point five years ago. Additionally, the Commission has received 102 complaints this year. Most of the March agenda centered on licensing eligibility and hardship requests for lapsed licenses. The one formal complaint considered serves as a sharp compliance warning for licensees that when documents are missing in a file, and especially when a licensee tries to fill that gap after the fact, the consequences can be significant. 

One case involved an audit of a qualifying broker who operates two separate real estate companies: one focusing solely on property management and one concentrating on traditional real estate services. The traditional real estate services company assisted in four closings in 2023, with the qualifying broker representing buyers in all four. Three of the transactions dealt with single-family residential homes and individual (non-entity) buyers, triggering the requirements for RECAD and estimated closing statements. AREC’s review of the files found that in two of the three transactions, the RECAD documents were signed by only the qualifying broker (not the consumer), while the third transaction had no RECAD document at all. All three of the transactions were also missing estimated closing statements (commonly referred to as “net sheets”). 

Shortly after the initial audit, the qualifying broker submitted a RECAD document from one of the 2023 transactions. However, that document was signed only by the qualifying broker and dated May 2025 – nearly two years after the transaction had closed. On the morning of the hearing, the broker produced fully executed RECAD documents and estimated closing statements from the three deficient transactions. But those documents had been obtained directly from the buyers, rather than being retained in a file under the qualifying broker’s control. The qualifying broker and the company were both found guilty and fined. Additionally, the qualifying broker is required to complete in-person continuing education courses covering risk management, broker management, and license law. 

The case emphasized several key principles. First, the RECAD Brokerage Services Disclosure Form and Agency Disclosure Office Policy, when required, must include either the consumer’s signature (in addition to the licensee’s signature) or a statement that the consumer declined to sign the documents, including the date of the consumer’s declination. Second, estimated closing statements must be provided to the consumer in single-family residential transactions anytime the consumer makes or receives an offer or counter-offer. 

Finally, Alabama license law requires transaction records to be maintained for three years. Retrieving documents from a consumer after the fact does not satisfy the record-keeping requirement, as required documents must be kept under the qualifying broker/company’s control. 

Compliance is not something to think about only when an auditor comes knocking; licensees must build strong file management habits from the start of every transaction. This is the most reliable way to protect your license. One of the easiest ways to build strong file maintenance habits and remain in compliance is by using AAR’s Required Forms Checklist. Designed specifically with Alabama license law in mind, this resource helps licensees identify which documents are required for residential real estate transactions. Keep in mind that additional documents may be necessary depending on the nature of the transaction and/or a company’s specific requirements, but the checklist is a starting point for accounting for every required detail and document of residential real estate transactions. 

If you have questions about record retention requirements and are an Alabama Association of REALTORS® member, please contact the Legal Line.