The agency disclosure clause
This is the one structural element the statute puts inside the contract itself. Every written offer to purchase must carry a section headed AGENCY DISCLOSURE, and it has to be filled in and initialed rather than left blank as boilerplate.
The section addresses both companies separately. For the listing company and again for the selling company, the form identifies whether that company is an agent of the seller, an agent of the buyer, an agent of both acting as a dual agent, or is assisting the buyer or the seller as a transaction facilitator. Two boxes can be checked where that accurately describes the arrangement.
Note that the vocabulary here tracks Alabama's current roles. Transaction facilitator replaced transaction broker, dual agency now means one licensee on both sides, and sub-agency is no longer recognized. A form still printing the retired terms should be replaced.
The estimated closing statement
When an offer is written or presented, the licensee must tell the buyer or seller that closing costs will be due and roughly what they will amount to. For the buyer, this has to happen before they sign the offer, and the buyer acknowledges receipt by signing the statement.
A lender's loan estimate is not a substitute. The loan estimate covers the mortgage — rate, payment, penalties. The licensee-prepared statement, sometimes called a net sheet, covers the whole transaction: every cost the party is likely to incur at closing, loan-related or not.
These statements go into the qualifying broker's file. Where more than one broker is involved, there is no requirement that every broker keep both the buyer's and the seller's statement, which avoids pointless duplication.
Two boundaries are worth knowing. The requirement targets residential transactions; it does not attach to commercial deals, though a brokerage is free to require it anyway as office policy. And a 2016 rule change removed the old obligation to prepare or furnish an actual closing statement — the estimate is what the rule now requires.
- Prepared and provided before the buyer signs the offer
- Acknowledged by the buyer's signature
- Broader than the lender's loan estimate — all anticipated closing costs
- Retained in the qualifying broker's file
- Required for residential transactions; commercial is office policy
Earnest money becomes trust funds immediately
The moment a salesperson or associate broker receives money belonging to someone else, it has to go to the qualifying broker without delay. The qualifying broker is responsible for depositing all trust funds received by the office, and that responsibility can only be waived in writing.
The account rules are strict and specific. The money sits in its own federally insured account at an Alabama bank, and the qualifying broker must be a registered customer there with authority to deposit, withdraw and write checks. Client money never mixes with the brokerage's own funds.
Deposit timing depends on the instrument. Cash goes in immediately. A check follows whatever timeline the contract states; if the contract is silent, the check is deposited when the offer becomes a contract. On a completed transaction, funds are released within seven business days. If the deal collapses or the parties dispute who is entitled to the money, the broker holds until there is a signed agreement from all parties or a court order.
The full rules are covered in our earnest money article; what matters at the offer stage is that these obligations attach the moment the check changes hands.
RESPA, TRID and accurate terms
License law is not the only rulebook at this stage. The Real Estate Settlement Procedures Act, a federal statute from 1974, exists to make settlement costs transparent and to protect buyers from inflated charges. Its most consequential provision for licensees is the prohibition on kickbacks and unearned fees — no fee, kickback or thing of value for referring business to a title company, lender or other settlement service provider.
TRID, the integrated TILA-RESPA disclosure regime, governs the lender's loan and closing disclosures. Licensees sometimes worry about their estimates diverging from the lender's final numbers. The Commission's guidance is to use your best estimate, state known expenses explicitly, and issue an amended statement when something changes significantly.
Separately, all terms of a sale must be accurately disclosed to everyone with a stake — lenders, guaranteeing agencies such as FHA or VA, and other interested parties like inspectors, appraisers and secondary loan purchasers. Misstating terms to make a loan work is not a shortcut; it is fraud.
One caution on the estimate itself: the rule is about anticipated closing costs. Adding projected mortgage payments is optional, not required, and if you include them the information still has to be accurate and not misleading.