Misrepresentation by Real Estate Agents

The Law is the Law

Alabama real estate licensees are governed by the Alabama Real Estate Commission; which specifically enforces the Alabama License Law. Over the next few weeks I will cover various topics of the Alabama License Law where violations occur that ends by disciplinary action taken by the Commission. Today we are focusing on Section §34-27-36 (a) (2) of the Alabama License Law which states: “Engaging in misrepresentation or dishonest or fraudulent acts when selling, buying, trading, or renting real property of his or her own or of a spouse or child or parent.” You will quickly see that this violation is specific to a licensed real estate agent selling, buying trading or renting their own property or property that is owned by a close family member.

Section §34-27-2 (b) of the license law states, “the licensing requirements of Articles 1 and 2 of this chapter shall not apply to any of the following persons and transactions. (1) Any owner in the managing of, or in consummating a real estate transaction involving, his or her own real estate or the real estate of his or her spouse or child or parent.” Simply stated, a real estate license is not required to be licensed in order to sell, trade, or rent real estate that you own yourself. Of course there are other articles of the law that also be met to ensure consumer protection.

Next let’s examine the situation where a real estate owner also possesses a real estate license. In this case they are allowed to list and sell their own property so long as do so within the guidelines of the licensing law. For example they must disclose to all potential buyers that they own all or part interest in the real estate as stated in Section §34-27-84 (a) (6) “To act on behalf of the licensee or his or her immediate family, or on behalf of any other individual, organization, or business entity in which the licensee has a personal interest only with prior timely written disclosure of this interest to all parties to the transaction.”  To boil this down to common language; if real estate agents own an interest of a property, they must disclose to any and all potential buyers that they own all or a part of that property. This disclosure should be in writing with signatures of all parties acknowledging this disclosure.

Having referred to the law regarding disclosure of licensee’s ownership of real property, if the disclosure is not made it would be misrepresentation, it would be a dishonest act, and could be considered a fraudulent act. If a licensee was found in violation of this law, they would probably also be in violation of other laws which we will examine in the near future. To be safe, disclose. Real estate agents commonly refer to a statement, “when in doubt, disclose.”

Should you have specific questions concerning various issues, please let me know and I’ll research the answer for you. I want to encourage you to subscribe to our “News & Updates” weekly report so you can stay abreast of issues that might affect you when buying or selling real estate.

Leave a Reply