Written brokerage agreements come first now
The headline change is about paper before practice. Before a licensee lists a property for sale, or writes an offer on behalf of a buyer, a written brokerage agreement has to be in place. That agreement must spell out the services the company will provide and how the company gets paid — compensation is no longer something to be settled later or left implied.
Showing a property is deliberately carved out. A licensee may show a home to a prospective buyer without a signed agreement in hand. Commission rule 790-X-3-.17 also makes clear that nobody has to keep showing homes to a consumer who will not sign one, so an office may set either policy and defend it.
Until an agreement is signed, the licensee is a transaction facilitator by default. That is not a gap in duty — the obligations owed to everyone in the transaction still apply — but it is not representation, and consumers should be told so in plain language.
- Required before listing a property or writing a buyer's offer
- Must state the services provided and the compensation to be paid
- Not required merely to show property to a prospective buyer
- No signed agreement means the licensee remains a transaction facilitator
Dual agency was narrowed, not expanded
Alabama now defines dual agency as one licensee representing both the buyer and the seller in the same transaction. The old framing swept in whole brokerages: if the listing and the buyer's agent both hung their licenses at the same firm, the office was in a limited consensual dual agency posture and everybody's file carried the paperwork to prove it.
That is no longer the case. When two different agents at one company each represent their own client, each can act as a single agent with full fiduciary duties to that client. Dual agency now arises only when the same person is on both sides.
Two terminology changes ride along with this. Limited consensual dual agency is simply dual agency. Transaction broker is now transaction facilitator. Sub-agency is no longer recognized as a brokerage role in Alabama at all. Forms, office policies and websites that still use the retired terms are describing a framework the statute abandoned.
Teams are now a defined thing in law
Alabama now carries a statutory definition of a team: at least two licensees, all licensed with one company, who collaborate on services and hold themselves out publicly as a recognizable unit inside that firm. Once you fit the definition, advertising rules attach.
A team advertisement must carry the name of at least one team member — the team leader's name is the usual choice — and it must display the affiliated brokerage's name just as prominently as the team name or the individual agents' names. The team's name has to include a word like 'team' or 'group' so nobody mistakes it for an independent brokerage.
The qualifying broker must authorize the team name in writing. That is a formalization of something that was already true in substance: the broker is answerable for every advertisement the office puts out, so the broker signs off on the name the public sees.
- At least one team member named in the ad
- Brokerage name displayed as prominently as the team or agent names
- Team name must include 'team', 'group' or similar
- Written authorization from the qualifying broker before the team advertises
Referral fees and penalties
A referral fee arrangement between licensees must be in writing to be valid. Demanding or paying a referral fee without a written referral agreement is unlawful, and trying to enforce a handshake arrangement is itself prohibited. There also has to be a legitimate basis for claiming the fee in the first place.
The Commission's maximum fine per violation increased to $5,000, up from $2,500. Fines are per violation, so a pattern across multiple files compounds quickly.
One more item belongs in this list because it changes an office document rather than a transaction: the brokerage's RECAD office policy must now spell out the firm's compensation structure — listing commissions, buyer broker fees and the rest — and every prospective client has to receive that policy in writing.
What to actually change in your office
Most of the work here is document maintenance, and it is the kind of work that quietly does not get done until an audit forces it.
Start with the forms. Any listing agreement, buyer agreement, agency disclosure or website page that says 'transaction broker', 'limited consensual dual agency' or 'sub-agent' is out of date. Then the office policy manual: add the compensation section and set a distribution method so every prospective client actually receives it in writing.
Finally, walk the practice. Confirm that agents are getting brokerage agreements signed before they list or write an offer, that any team in the office has written authorization and compliant advertising, and that referral arrangements are papered before money moves.
- Update forms and website copy that use retired role names
- Add compensation to the RECAD office policy and deliver it in writing
- Confirm brokerage agreements are signed before listing or offering
- Authorize team names in writing and audit team advertising
- Put every referral fee arrangement in writing before claiming it