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Renewal Requirements is in accordance with Code of Alabama 1975, Section 34-27-35 and Rule 790-X-2-.16

q All permanent licenses willexpire on September 30,2000.

q Renewal forms will bemailed by August 1, 2000 –notify Commission if notreceived by August 10,2000.

q Because of new computersoftware, NO CHANGES arepermitted on the renewalforms. Changes willseriously delay processingtime.

q The entire renewal formmust be returned to theCommission – do not tearor separate the form forany reason.

q All renewal requirements(forms, fees, E&Overification, CE) are due inthe Commission office

by August 31, 2000, orpostmarked by the U.S.Postal Service by that date.All renewal requirementsreceived postmarked afterthis date will result in thelicense(s) being issued oninactive status on October1, 2000.

q Renewal fees received afterthe August 31 deadline willbe subject to a penalty feeof $65 in addition to therenewal fee.

q Personal checks, businesschecks, cash or anycertified funds areacceptable forms ofrenewal payment.

q Renewal fees are asfollows:Broker… … … … … … $95Salesperson… … … . $75Corporation,Partnership andBranch… … … .… … … $70

q Inactive Licenses must berenewed the same as anactive license.

q Temporary Salespersonlicenses are not subjectto renewalrequirements.

q Reciprocal licensees maysubmit proof of Errors &Omissions insurance bysubmitting a Certification ofLicensure documentingmembership in a “Group”Errors & Omissions Insuranceprogram. Otherwise, licenseesmust submit a Certification ofCoverage form.

Fall 2000

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EDUCATION CORNERBy Pat Anderson, Education Director

CE Due By August 31, 2000: Check Your Credit On The Web!It’s that time again! Many of youhave completed all or part of yourcontinuing education courses butthere are a lot of you out therewho have not taken any of it. Timeis passing by. You need to get itdone now!

How to Check Your CE Credit:Many of you are calling theCommission office to find out howmany hours of continuingeducation we have on record foryou. In fact, the educationdepartment is getting about 75 ofthese calls per day. Now there isquick, easy, free way to do it andyou can check 24 hours a day (ifyou happen to be awake at 2:00a.m. with nothing else to do). Goto www.arec.state.al.us and clickon License Search. From there youcan put in your last name orlicense number. Find your name inthe list that comes up and click onit and presto! Your continuingeducation credit appears. It is thateasy.

Here is the rest of the story. If youcall the Commission office to checkon your continuing educationcredit, you will be told that youneed to send a written request anda $10 fee for a printout and it willbe mailed to you. The Commissionsimply does not have staffresources to dedicate to looking upCE for 16,000 active licensees andgiving you the information bytelephone. That is why we put it onthe web for your easy access.

What CE to Take: How couldanybody be confused at this point,but let’s take it from the top onemore time. For this licenserenewal, those required to takecontinuing education mustcomplete twelve hours. Thattwelve hours consists of thefollowing: 3 hours in RiskManagement; 3 hours in one of the3 following mandatory courses –License Law/Trust Funds, RECADor Fair Housing; and 6 hours inapproved electives. For licensees

who completed twelve hours ofcontinuing education (6 hoursmandatory and 6 hours elective)prior to September 30, 1999, youdo not have to take RiskManagement for this renewal.Everybody else does (except thosewho are exempt due to age).

Missing the August 31Deadline: NOT ADVISABLE! Therewill be no continuing educationcourses offered in September sodon’t even think about missing theAugust 31 deadline. If you renewyour license by August 31 but failto take all of your required CE andmail in the certificates by August31, your license will be issued toinactive status on October 1. Thatmeans you are out of businessuntil you complete your continuingeducation and reactivate yourlicense. During this time of theyear, reactivation takes two to fourweeks. Do not set yourself up foran unwanted vacation.

OFFICIAL Notice Of Practice From The Alabama Real Estate Commission

ATTENTION ALL BROKERS!

Real Estate Commission auditors look for TRUST ACCOUNT shortages everyday, including property managementaccounts You cannot on behalf of your client pay for any repairs on a property you are managing if that client doesnot have funds being held by you in trust equal to the amount of the cost of the repair, unless you choose toadvance the money from your own general account and invoice the client for reimbursement later. It is a violation oflaw to use money held in trust for the benefit of any client other than the one for whom it is being held in trust.These violations result in formal complaints, hearings and disciplinary actions.

*This statement was adopted by the Alabama Real Estate Commission April 14, 2000, and directed for distribution toall Qualifying Brokers, prelicense instructors, License Law and Risk Management CE instructors, and all commonlyread statewide real estate related publications.

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BRIEFLY LEGALBy Charles R. Sowell, General Counsel

Here is the situation. You are thelisting agent. Your company has anagency relationship with the sellersof a house that has a basement.You are showing it to hopefulbuyers. While looking at thesomewhat dark basement, one ofthem asks, “Does the basementleak?” You know it does, butbefore you answer you think toyourself; “Oh no. That is the onlyproblem with this house. Otherwiseit is perfect, and a great buy forthese people.” You remember whatthe sellers told you. They said ithad leaked some, and only afterthat freak hurricane. But you sawthree or four high water stainmarks a foot or so above floorlevel. You saw other evidence ofleaking and water damage, too.

Here are some possible answers tothe buyers’ question:

1. I am not sure. It has not reallyrained since we listed it.

2. This house is being sold “as is.”We are making norepresentations about itscondition.

3. We need to get back upstairs.There is a lot more to see.

4. Maybe just a little in floodingconditions.

5. This house is a great buy foryou.

Are any of these your final answer?If so, the buyers’ attorney could bea millionaire. All these answers arelikely fraud under Alabama law.Some of the best authority in this

area is Cato v. Lowder Realty Co.,630 So2d 378. In this case thebuyers sued the sellers and thecompany over a leaky roof anddefective furnace. The case isbased on statutory Alabama fraud

law, which says that suppression ofa material fact, which a party isunder an obligation tocommunicate, constitutes fraud.The statute is Section 6-5-102Code of Alabama 1975, asamended. In this case the courtdiscusses caveat emptor, and goeson to say, “Seller generally has aduty to disclose defects to a buyeronly if a fiduciary relationshipexists between the parties or if thebuyer specifically inquires about amaterial condition concerning theproperty, in which case the sellerhas an obligation to disclose knownfacts.”

The court then cites Boswell v.Coker, 519 So2d 493. This casesays; “Where one responds to aninquiry, it is his duty to impartcorrect information, and he isguilty of fraud if he denies allknowledge of a fact which heknows to exist, or if he givesequivocal, evasive, or misleadinganswers calculated to convey a

false impression, even thoughliterally true as far as they go, or ifhe fails to disclose the wholetruth.” Let me cite one more case.“This section does not requireproof of intent to deceive, as thebreach of an obligation to discloseis sufficient to trigger liability forfraudulent suppression.” Intercorp,Inc. v. Pennzoil Co., 877 F.2d1524. If you are having troubleunderstanding the court’slanguage, allow me to translate. Ifyou are asked a specific question,the court is saying, “Spill yourguts.”

Let’s summarize the law onfraudulent suppression in Alabama.If you are an agent for the buyeror seller, you have a duty withoutbeing asked to disclose known,material facts to your client.Regardless of agency relationships,you have a duty to accurately andcompletely answer any specificquestions about known, materialfacts regarding the property.

Now back to our question. Thebuyers asked, “Does the basementleak?” Your final answer should be;“Yes. The sellers said it has leaked,and there is evidence of leakingand water damage.” In the Lowdercase the buyer did not ask anyoneabout the condition of the roof orthe furnace. Lowder Realty was anagent for the sellers. For thesereasons, neither the sellers norLowder Realty were held liable.

DISCIPLINARY ACTIONS TAKENFebruary through June 2000

Name: Lou Thorne, QualifyingBroker, Birmingham, AlabamaDate of Hearing: February 17,2000Disposition: Ms. Thorne wasfound guilty and fined $250 forviolation of the Code of Alabama1975, as amended, Section 34-27-36(a)(8)a. and Section 34-27-36(a)(8)b. by commingling moneybelonging to others with her ownfunds and failing to deposit andproperly account for at all timesmoney coming into her possessionwhich belonged to others.

Name: Binion Clark Langus,Salesperson, Mobile, AlabamaDate of Hearing: February 17,2000Disposition: Mr. Langus wasfound guilty and fined $250 forviolation of the Code of Alabama1975, as amended, Section 34-27-36(a)(16) by presenting to theAlabama Real Estate Commission,as payment for a fee or fine, acheck which was returned unpaidby the bank upon which it wasdrawn.

Name: James Mark Jones,Qualifying Broker, and JonesPrestige Properties, Inc., Auburn,AlabamaDate of Hearing: March 17, 2000Disposition: Mr. Jones was foundguilty and fined $250 for violationof the Code of Alabama 1975, asamended, Sections 34-27-36(a)(8)a. and 34-27-36(a)(8)b.,for a real estate broker to fail todeposit and account for at all timesall funds to be held in trust forother parties. Section 34-27-36(a)(19) and Alabama Real EstateCommission Rule 790-X-3-.03(2)for a real estate broker to fail todeposit an earnest money check atthe time an offer becomes a

contract and is signed by theparties.

Name: Tom A. West III.,Qualifying Broker, and Tom WestCompany, Inc., Dothan, AlabamaDate of Hearing: March 17, 2000Disposition: Mr. West was foundguilty and fined $500 for violationof the Code of Alabama 1975, asamended, Sections 34-27-36(a)(8)a. and 34-27-36(a)(8)b.,for a real estate broker to fail todeposit and account for at all timesall funds to be held in trust forother parties. Section 34-27-36(a)(19) and Alabama Real EstateCommission Rule 790-X-3-.03(2)for a real estate broker to fail todeposit an earnest money check atthe time an offer becomes acontract and is signed by theparties.

Name: Bonnie J. Wilson,Salesperson, Decatur, AlabamaDate of Hearing: March 17, 2000Disposition: Ms. Wilson wasfound guilty and fined $250 forviolation of the Code of Alabama1975, as amended, Section 34-27-36(a)(16) by presenting to theAlabama Real Estate Commission,as payment for a fee or fine, acheck which was returned unpaidby the bank upon which it wasdrawn.

Name: E. B. Odom, Jr., QualifyingBroker and E. B. Odom,et al.,Incorporated, Opelika Alabama

Date of Hearing: March 17, 2000Disposition: Mr. Odom and E. B.Odom, et al., Incorporated, werefound guilty and fined $250 forviolation of Code of Alabama 1975,as amended, Sections 34-27-36(a)(8)a. and 34-27-36(a)(8)b.,for a real estate broker to fail todeposit and account for at all timesall funds to be held in trust forother parties. Section 34-27-36(a)(19) and Alabama Real EstateCommission Rule 790-X-3-.03(2)for a real estate broker to fail todeposit an earnest money check atthe time an offer becomes acontract and is signed by theparties.

Name: Richard Lee Stafford,Inactive Salesperson, Hoover,AlabamaDate of Hearing: March 17, 2000Disposition: Formal complaintdismissed.

Name: Mary B. Dubose, QualifyingBroker, Elba, AlabamaDate of Hearing: March 17, 2000Disposition: Ms. Dubose wasfound guilty and fined $250 forviolation of the Code of Alabama1975, as amended, Section 34-27-36(a)(19); Rule 790-X-3-.04 for areal estate broker to fail to use therequired estimated closingstatements; Section 34-27-36(a)(19); Rule 790-X-3-.13 for areal estate broker to fail to use therequired Real Estate BrokerageServices Disclosure Forms Section34-27-36(a)(19) for a real estatebroker to fail to include in all salescontract forms the agencydisclosure clause required bySection 34-27-8(c); Section 34-27-36(a)(19) for a real estate brokerto fail to have in place the RECADAgency Office Policy required bySection 34-27-83; Section 34-27-36(a)(8)a. for a real estate broker

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to commingle money belonging toothers with her own fundsSection34-27-36(a)(8)a. andSection 34-27-36(a)(8)b. for a realestate broker to fail to deposit andaccount for at all times all funds tobe held in trust for other parties.

Name: Gail Oris Carlsen,Salesperson, Columbus, GeorgiaDate of Hearing: April 14, 2000Disposition: Ms. Carlsen wasfound guilty and fined $250 forviolation of the Code of Alabama1975, as amended, Section 34-27-36(a)(16) by presenting to theAlabama Real Estate Commission,as payment for a fee or fine, acheck which was returned unpaidby the bank upon which it wasdrawn.

Name: Howell Realty, Inc., d/b/aRE/MAX Group, and Hoyt W.Howell, Jr., Qualifying Broker,Anniston, AlabamaDate of Hearing: April 14, 2000Disposition: Howell Realty, Inc.,d/b/a RE/MAX Group, and Hoyt W.Howell, Jr., were found guilty andfined $1000 for violation of theCode of Alabama 1975, asamended, Sections 34-27-36(a)(8)a. and 34-27-36(a)(8)b.,for a real estate broker to fail todeposit and account for at all timesall funds to be held in trust forother parties. Section 34-27-36(a)(19) and Alabama Real EstateCommission Rule 790-X-3-.03(2)for a real estate broker to fail todeposit an earnest money check at

the time an offer becomes acontract and is signed by theparties.

Name: Charles D. Storey,Qualifying Broker, Tuscaloosa,AlabamaDate of Hearing: April 14, 2000Disposition: Charles D. Storeywas found guilty and fined $1000for violation of the Code ofAlabama 1975, as amended,Sections 34-27-36(a)(8)a. and 34-27-36(a)(8)b., for a real estatebroker to fail to deposit andaccount for at all times all funds tobe held in trust for other parties.Section 34-27-36(a)(19) andAlabama Real Estate CommissionRule 790-X-3-.03(2) for a realestate broker to fail to deposit anearnest money check at the timean offer becomes a contract and issigned by the parties.

Name: Hazel L. Etheridge,Salesperson, Millbrook, AlabamaDate of Hearing: May 12, 2000Disposition: Ms. Etheridge wasfound guilty and fined $250 forviolation of the Code of Alabama1975, as amended, Section 34-27-36(a)(16) by presenting to theAlabama Real Estate Commission,as payment for a fee or fine, acheck which was returned unpaidby the bank upon which it wasdrawn.

Name: South First Limited Oned/b/a RE/MAX Huntsville, and

Charles V. Lanza, QualifyingBroker, Huntsville, AlabamaDate of Hearing: June 8, 2000Disposition: South First LimitedOne d/b/a RE/MAX Huntsville, andMr. Lanza were found guilty andfined $500 for violation of the Codeof Alabama 1975, as amended,Sections 34-27-36(a)(8)a. and 34-27-36(a)(8)b., for a real estatebroker to fail to deposit andaccount for at all times all funds tobe held in trust for other parties.Section 34-27-36(a)(19) andAlabama Real Estate CommissionRule 790-X-3-.03(2) for a realestate broker to fail to deposit anearnest money check at the timean offer becomes a contract and issigned by the parties.

OTHER ADMINISTRATIVEACTIONSDetermination for LicensingEligibility

Approved…………………….……………6

Denied………………………………….….1

COMPLAINTS ANDINQUIRIES

From Licensees……..…………….1475

From Public…………………….…….831

Anonymous………………..…………..31

Lawsuits……………..………………….77

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Real Estate Coalition and Interchange BringEffective Forum for Referral Fee Issues

After-the-fact referral fees havecome under fire nationally forseveral years. Because thepayment of referral fees hastraditionally not been guided byconsistent standards of businesspractice, discrepancies indetermining the origin or existenceof a referral fee agreement occur.To address the referral fee issue,the Employee Relocation Council(ERC) developed the Real EstateCoalition for Cooperative BusinessPractices, an industry-led group ofconcerned and dedicatedcorporations and professionalservices firms. On behalf of itsmembership, the Coalitionadvocates its principles at the local,state and national levels with realestate commissions, legislatures,governmental leaders andprofessional associations.

The Coalition has forged a strongrelationship with the Association ofReal Estate Licensing Law Officials(ARELLO). In fact, its innovativework with ARELLO led to a mutualagreement of proper business: thePolicy Statement on the Collectionof Real Estate Referral Fees.

ARELLO representative SandyTaraszki of Howard Hanna RealEstate notes that, “A successfulreferral fee policy should be basedupon the assumption that certainbusiness procedures have beenfollowed which create anenforceable obligation for thepayment of referral fees. ARELLOand the Coalition have managed tocreate this effective policy, withwhich hundreds of Coalitionmembers have already pledged tocomply. And the Coalition shouldbe commended for furtherenhancing this effort by creatingthe ‘Interchange’ in a proactivemove to provide its constituentswith a forum to resolve referral feeissues.”

The Coalition's Interchange wascreated to facilitate thecommunication of after-the-factreferral fee concerns and thecollection of information that willaid in the Coalition's efforts.Through the Interchange, it ispossible to ensure swift andequitable problem resolution bybringing the issue to the attentionof the appropriate executive fromrelocation service firms.

Pamela J. O'Connor, SCRP,president & CEO of RELO, thelargest national real estate networkfor independent brokers said, "Wehave found that our member firmshave been successful in securingwaivers of after-the-fact referralfees by referencing the Coalition'spolicy statement to relocationcompanies who have attempted tocharge such fees. In fact, thepolicy statement is so effective thatreferring to it has so far pre-empted our members' need to usethe Interchange, though I believethe very existence of such a forumis highly effective in eliminatingoccurrences of unfair practices. Noone wants to be spotlighted forpractices which the industry hasidentified as being inappropriate."

“I think the absolute worst thingthat happens in the relocationindustry is when a transferee ispulled into one of these referral feeissues, which is exactly theopposite of our collective goal – tominimize the transferee's stressand inconvenience. From the realestate broker's perspective, theInterchange provides anopportunity to be heard, and tohave disputes resolved fairly andon the basis of the facts. Any timean open forum for communicationis established and utilized by allparties to a dispute, the chance ofreaching a mutually acceptableresolution increases enormously,

giving us all greater faith in ‘thesystem’,” said Sheila Barr, director,marketing & relocation, Patterson-Schwartz Real Estate.

For information on the Coalitionand the Interchange, visit theCoalition’s Web site athttp://coalition.erc.org. This willallow users to access theInterchange and download theCoalition’s pledge and othercommunication about theCoalition’s efforts. To learn aboutthe Employee Relocation Council,visit its Web site at www.erc.org orcall 202/857-0857.

ERC is a nonprofit professionalmembership organizationaddressing workforce transitionissues and the effective relocationof employees worldwide. ERC'scurrent membership includescorporations and government andmilitary agencies that relocate theiremployees, as well as nearly11,000 individuals and companiesfrom the relocation industryincluding real estate appraisers andbrokers, area and personalcounseling services, consultingservices, home inspectioncompanies, household goodsmovers, mortgage services,national home purchase firms, anda variety of other relocation-relatedservices.

Reprinted Article

Bulk RateU.S. Postage

PAIDMontgomery, AL

Permit 2861201 Carmichael Way

Montgomery, Alabama 36106

COMMISSIONERSStarke Irvine,

Chairman, Daphne

George P. Hayes, Birmingham

Gordon Henderson, Albertville

Chester Mallory, Montgomery

Gloria Nicholson, Auburn

Charles Nicrosi, Montgomery

Bill E. Poole, Huntsville

Crawford Welch, Montgomery

Ruth T. Whitley, Tuscaloosa

D. Philip Lasater, Executive Director

Vernita M. Oliver-Lane, Editor

The Alabama Real Estate CommissionUPDATE is published for the benefit of the

Alabama Real Estate Industry by theAlabama Real Estate Commission.

Phone: (334)242-5544Fax: (334)270-9118

http://www.arec.state.al.us

State of Alabama

REAL ESTATE Commission