HB397 Alabama 2025 Session

Summary

Primary Sponsor

Patrick SellersRepresentative

Democrat

Session

2025 Regular Session

Title

Real Estate Commission; to authorize disciplinary actions against a licensee for not making certain required disclosures and failing to give proper notice of an equitable interest assignment

Summary

HB397 would let the Alabama Real Estate Commission discipline licensees who fail to disclose equitable interests in residential real estate contracts and related notice requirements.

What This Bill Does

The bill adds new grounds for disciplinary action for licensees who do not disclose that a seller is not the deed holder when selling or assigning an equitable interest in a contract to purchase residential real estate. It requires written disclosure to the seller of the buyer's plan to assign an equitable interest before the assignment, at least three business days' notice of the assignment's effective date, and a closing date with no automatic extension. It expands definitions and strengthens enforcement powers for the Commission, including license suspension or revocation, fines, and cease-and-desist orders for violations, with an effective date of October 1, 2025.

Who It Affects

• Real estate licensees (brokers, associate brokers, salespersons, and licensed companies) could be disciplined for failing to disclose equitable interests and related notice requirements in residential deals.
• Buyers and sellers in residential real estate transactions would have greater protection due to mandatory disclosures and notice requirements.

Key Provisions

• Authorizes disciplinary action by the Alabama Real Estate Commission for selling, assigning, or offering to assign an equitable interest in a residential contract without informing the buyer that the seller is not the deed holder.
• Requires the licensee to disclose in writing to the seller the buyer's intent to assign an equitable interest before the assignment, to provide at least three business days' notice of the assignment's effective date, and to set a fixed closing date with no automatic extension.
• Includes new and updated definitions (eg, equitable interest, associate broker, qualifying broker) as part of the Real Estate Commission's rules.
• Provides for disciplinary measures (license revocation or suspension, fines, or reprimand) and enables additional remedies such as restitution and approved education, plus cease-and-desist orders against unlicensed entities; sets enforcement mechanisms and penalties.

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

Subjects

Property & Estates