SB228 Alabama 2023 Session

Summary

Primary Sponsor

Dan RobertsSenator

Republican

Session

Regular Session 2023

Title

Relating to residential real estate transactions; to require buyers to make certain disclosures to homeowners and other interested parties that the buyer intends to engage aspects of a wholesale transaction; and to deem unenforceable certain unfair service agreements purporting to establish a long-term right to list between real estate companies and residential real estate owners; and in connection therewith would have as its purpose or effect the requirement of a new or increased expenditure of local funds within the meaning of Section 111.05 of the Constitution of Alabama of 2022.

Summary

SB228 would require buyers who wholesale single-family homes to disclose their plans to homeowners and other parties, bar long-term unfair listing agreements, and impose penalties to curb predatory practices.

What This Bill Does

It requires a buyer to disclose in writing the nature of the buyer's equitable interest, the intent to market the property, and the timing of any assignment before marketing, applicable only to single-family homes. It deems certain long-term listing agreements unfair and unenforceable, and prohibits recording such agreements; violations carry criminal penalties and potential damages. It allows affected parties to seek court orders voiding the agreements and to recover damages, including statutory damages of $10,000 for recorded unfair agreements and three times the relevant fee or amount received by the buyer. It includes exceptions and clarifications (e.g., not applying to warranties, insurance, options, HOA-related matters, mortgages, or utilities) and specifies the act's effective date and local expenditure considerations.

Who It Affects

• Homeowners selling or involved in single-family residential properties; they would receive disclosures from wholesale buyers and be protected from long-term, unfair listing agreements.
• Wholesale buyers and real estate service providers handling single-family properties; they must provide disclosures, face potential penalties for noncompliance, and risk civil damages or criminal charges.

Key Provisions

• Written disclosures required: the buyer must disclose the nature of the equitable interest, intent to market, and the effective date of any assignment at least three business days before the assignment, to the seller and any potential purchaser or assignee.
• Unfair service agreements: long-term (up to 40 years) marketing or listing arrangements that bind homeowners or create liens or other encumbrances are deemed unfair and unenforceable, may not be recorded, and can be voided; recording such agreements carries statutory damages of $10,000.
• Penalties and remedies: violations can be Class C misdemeanors; affected parties may recover tres times the fee from the buyer, actual damages, costs, and attorney fees; parties may seek court orders declaring the agreement void.
• Scope and exemptions: applies only to single-family residential property and does not apply to home warranties, insurance contracts, options or rights to purchase, HOA management agreements, declarations, mortgages, UCC security interests, or regulated utilities; rights to contract otherwise are not affected.
• Effect and local funding note: the act is exempt from local expenditure requirements due to its status as creating new crimes, and becomes effective on the first day of the third month after passage and governor approval.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.