Alabama violations and discipline, the largest area
Violations that can lead to discipline are the largest area of the state part: 15 of the 40 questions, and with the disciplinary process and the Recovery Fund this page covers 19. The outline lists the violation types one by one, from misrepresentation to offers.
Updated Oct 24, 2026 · Not affiliated with any state commission or test provider.
19state questions
30prohibited acts in the law
$100 to $5,000fine per violation
20questions on this page
What the areas cover
Outline areas V, VI and X, salesperson counts:
X Violations (15): misrepresentation and dishonest dealings, inducing a breach of contract, advertising, listing agreements, disclosure, records, rebates, paying unlicensed persons, failing to report a suit or judgment, lotteries, documents, Commission orders, offers.
VI Disciplinary process (2): complaints, hearings, actions, rehearing, appeals.
V Recovery Fund (2): payment into and out of the fund.
The prohibited acts, grouped
Section 34-27-36(b) lists 30 acts. Grouped the way the outline groups them:
Money: commingling or failing to remit others’ funds; not keeping trust money in a federally insured account at an Alabama institution; rebates; sharing a fee with anyone but a licensee or a multiple listing service; a salesperson taking pay from anyone but their qualifying broker.
Listings and advertising: a net listing; a listing with no fixed expiration date; a sign without the owner’s consent; ads where the company name is not at least as large as any other name; free lots or lotteries to induce a purchase.
Honesty and disclosure: hiding a known latent defect; false promises; inducing a breach to substitute your own contract; buying a listed property without telling the owner; not telling a buyer or seller about closing costs when an offer is presented.
Records and the Commission: not keeping transaction records for three years; not producing records or information on demand; ignoring a Commission order.
20 violations and discipline questions
0 of 20 answered · 0 correct
Question 1 of 20 · Violations, discipline and the Recovery Fund · 19 items
The Commission receives a formal complaint alleging a broker committed fraud. Before the Commission can revoke the broker's license, what procedural step is it legally required to take?
Answer and explanations
Incorrect: Grand juries belong to criminal cases, not to license discipline.
Incorrect: The Recovery Fund pays only on a court judgment; it is not a step before discipline.
Incorrect: Suspending first and asking later skips the hearing the accused is entitled to.
Incorrect: Commission discipline is administrative and does not wait for a criminal conviction.
Correct: The accused must be served with the formal complaint and given at least 15 days' notice of a hearing before any license can be revoked.
Question 2 of 20 · Violations, discipline and the Recovery Fund · 19 items
After a formal hearing determines that a licensee has stolen client funds, which specific disciplinary penalty is the Alabama Real Estate Commission legally authorized to impose upon that licensee?
Answer and explanations
Incorrect: Only a criminal court can convict; the Commission's case is administrative.
Incorrect: Jail is a criminal sentence, outside any licensing board's reach.
Incorrect: Damages are awarded by courts, not by the Commission.
Incorrect: Seizing property needs a court process; the Commission has no such power.
Correct: Revoking or suspending licenses is squarely within the Commission's powers after a hearing.
Question 3 of 20 · Violations, discipline and the Recovery Fund · 19 items
When the Alabama Real Estate Commission receives a formal consumer complaint regarding a licensee, what constitutes the initial step in the disciplinary process?
Answer and explanations
Incorrect: Revocation can come only at the end, after a hearing.
Incorrect: Commission cases are not handed to a criminal prosecutor.
Incorrect: A fine is a result of a hearing, never automatic on a complaint.
Correct: A complaint is first investigated to decide whether probable cause exists for a formal complaint and hearing.
Incorrect: There is no sentencing in an administrative case.
Question 4 of 20 · Violations, discipline and the Recovery Fund · 19 items
A licensee wishes to resolve a disciplinary complaint without undergoing a formal public hearing. This is typically achieved through:
Answer and explanations
Correct: The accused may waive the hearing and settle by agreeing to discipline, which is recorded as a consent order.
Incorrect: Settlements with the Commission are in writing; a verbal plea is not how it works.
Incorrect: A private court settlement between other parties does not resolve the license complaint.
Incorrect: An informal warning is not a recognized way to close a formal complaint.
Incorrect: Arbitration is not part of the Commission's process.
Question 5 of 20 · Violations, discipline and the Recovery Fund · 19 items
Under Alabama law, which of the following is NOT permitted when cobrokering?
Answer and explanations
Incorrect: Cooperating with out-of-state brokers who are licensed in Alabama is allowed.
Incorrect: Sharing listings with other licensed brokers is ordinary cooperation.
Correct: A salesperson may take a commission only from the salesperson's own qualifying broker, so paying another company's agent directly is barred.
Incorrect: Paying a share to another brokerage is how co-brokered deals are split.
Question 6 of 20 · Violations, discipline and the Recovery Fund · 19 items
Which advertising practice violates Alabama Real Estate Commission rules?
Answer and explanations
Incorrect: Licensed photos used with permission raise no license-law issue.
Correct: Marketing property without the owner's consent, starting with a sign on the lot, is a ground for discipline.
Incorrect: Showing the company name is required, not a violation.
Incorrect: Accurate descriptions are exactly what the rules expect.
Question 7 of 20 · Violations, discipline and the Recovery Fund · 19 items
Under Alabama law, a broker who fails to maintain complete transaction records for at least how long is subject to disciplinary action?
Answer and explanations
Incorrect: Five years is more than the law requires; it is not the Alabama rule.
Incorrect: One year is shorter than the law requires.
Correct: A qualifying broker must keep copies of contracts, leases, listings and other transaction records for three years.
Incorrect: Seven years is longer than the license law requires.
Question 8 of 20 · Violations, discipline and the Recovery Fund · 19 items
A broker instructs an affiliated licensee to represent a property as having city water when it actually has a well. The licensee follows these instructions. Who is subject to disciplinary action?
Answer and explanations
Incorrect: Fixing the lie only when asked does not undo a misrepresentation already made.
Correct: The broker broke the rule against directing a violation, and the licensee is still liable for the misrepresentation made.
Incorrect: The licensee cannot pass the blame up; both can be disciplined.
Incorrect: Following orders does not protect the licensee who made the false statement.
Question 9 of 20 · Violations, discipline and the Recovery Fund · 19 items
The Alabama Real Estate Recovery Fund is primarily designed to:
Answer and explanations
Incorrect: The fund does not defend licensees; it protects the people they harm.
Correct: The Recovery Fund pays actual losses that consumers suffer from a licensee's violations, once a court judgment goes unpaid.
Incorrect: Commission operations are paid from license fees, not from the fund.
Incorrect: The fund has nothing to do with retirement benefits.
Question 10 of 20 · Violations, discipline and the Recovery Fund · 19 items
What must a consumer typically establish to recover money from the Recovery Fund?
Answer and explanations
Incorrect: The statute requires a judgment from a court, not an arbitration award.
Incorrect: Bankruptcy does not open the fund; an unpaid judgment does, and a discharge does not erase the duty to repay it.
Incorrect: A complaint to the Commission can start discipline, but it does not open the fund.
Correct: A claimant needs a court judgment against the licensee that remains unpaid after all appeals.
Question 11 of 20 · Violations, discipline and the Recovery Fund · 19 items
A licensee who attempts to persuade a seller to terminate a valid exclusive listing agreement with another broker is engaging in:
Answer and explanations
Incorrect: No payment to anyone is involved.
Incorrect: No sign is placed; the licensee only tries to talk the seller out of a contract.
Incorrect: The facts show no second party the licensee is acting for.
Correct: Talking a seller out of a valid listing to sign a new one for the licensee's gain is inducing a party to breach a contract.
Question 12 of 20 · Violations, discipline and the Recovery Fund · 19 items
Which of the following activities constitutes a lottery violation that could result in disciplinary action?
Answer and explanations
Correct: A drawing where buying property gives a chance at a prize is a lottery used to influence a purchase, which is barred.
Incorrect: Closing cost credits offered openly are a price term, not a lottery.
Incorrect: Saying the seller will negotiate is not a game of chance.
Incorrect: A fixed, announced discount involves no chance, so it is not a lottery.
Question 13 of 20 · Violations, discipline and the Recovery Fund · 19 items
A licensee who continues to practice real estate while their license is suspended is committing:
Answer and explanations
Incorrect: Rebates are a separate violation not present in this scenario.
Incorrect: A net listing is about how a commission is set, which the facts do not touch.
Incorrect: Commingling concerns trust money; nothing in the facts involves funds.
Correct: Practicing while suspended disregards the Commission's order, which is a separate violation on top of the unlicensed activity.
Question 14 of 20 · Violations, discipline and the Recovery Fund · 19 items
Under Alabama law, which violation occurs when a salesperson hands out business cards that do not show the name of the company the salesperson is licensed under?
Answer and explanations
Correct: A salesperson's advertising, business cards included, must show the qualifying broker's or company's name prominently.
Incorrect: No money is involved, so trust account rules do not apply.
Incorrect: Nothing of value changes hands, so it is not a rebate.
Incorrect: Dual agency concerns representing both sides, which the facts do not raise.
Question 15 of 20 · Violations, discipline and the Recovery Fund · 19 items
During an investigation, a Commission investigator asks a qualifying broker to produce a closed transaction file, and the broker refuses. The refusal is:
Answer and explanations
Correct: Failing or refusing on demand to produce a transaction record for the Commission is a ground for discipline in its own right.
Incorrect: Transaction records must be kept for three years, so a one-year-old file is still covered.
Incorrect: A client's objection does not override the broker's duty to the Commission.
Incorrect: The Commission can demand records directly and issues its own subpoenas.
Incorrect: The duty to produce records applies during the investigation, before any formal complaint.
Question 16 of 20 · Violations, discipline and the Recovery Fund · 19 items
A salesperson's original license is issued on inactive status in January and first activated in June. When is the Recovery Fund fee for that license paid?
Answer and explanations
Incorrect: Renewal is not the trigger; activation is.
Correct: A license issued on inactive status owes no Recovery Fund fee until it is activated; the fee is paid with the activation.
Incorrect: The fee funds the program up front; it is not charged per claim.
Incorrect: Commission rules defer the fee for a license issued inactive.
Incorrect: The deferral ends at activation; it is not a waiver.
Question 17 of 20 · Violations, discipline and the Recovery Fund · 19 items
A licensee receives a final Commission order suspending the license and files an application for rehearing 20 days later. While the application is pending, the suspension:
Answer and explanations
Incorrect: Filing on time preserves the request but does not lift the order.
Incorrect: No automatic 30-day pause exists.
Incorrect: The statute says the opposite: filing does not modify the effective date.
Correct: An application for rehearing does not change the effective date of the decision, so the suspension keeps running.
Incorrect: The $200 bond is for an appeal to circuit court, and even an appeal does not pause the order.
Question 18 of 20 · Violations, discipline and the Recovery Fund · 19 items
At a Commission disciplinary hearing, what right does the accused licensee have?
Answer and explanations
Incorrect: The hearing builds the record that any appeal is decided on.
Incorrect: A Commission hearing is an administrative proceeding with no jury.
Correct: The accused may appear personally or through an attorney, testify, and examine witnesses.
Incorrect: Hearings are held in Montgomery County unless the Commission picks another permitted county.
Question 19 of 20 · Violations, discipline and the Recovery Fund · 19 items
After the Recovery Fund pays a consumer's judgment against a licensee, what can happen to that licensee?
Answer and explanations
Incorrect: The repayment duty attaches to the licensee whose conduct caused the claim.
Incorrect: The Commission takes over the consumer's rights in the judgment, so the debt is not over.
Incorrect: The statute says a bankruptcy discharge does not relieve the licensee of these consequences.
Correct: The Commission may terminate the licensee's licenses and refuse a new one until the fund is repaid in full with 12 percent interest.
Question 20 of 20 · Violations, discipline and the Recovery Fund · 19 items
An Alabama licensee is served with a civil lawsuit about a real estate transaction the licensee handled. Within how many days must the licensee notify the Commission?
Answer and explanations
Incorrect: Ninety days is the life of a passing exam score, not a reporting deadline.
Correct: The licensee must tell the Commission in writing, by certified mail, within 10 days and include a copy of the summons and complaint.
Incorrect: Thirty days is the address-change deadline, not the lawsuit-report deadline.
Incorrect: Sixty days is far longer than the law allows.
Answer every question to see your score
From complaint to appeal
Investigation. On a verified written complaint or on its own, the Commission investigates. If probable cause is found, a formal complaint is filed and a hearing is held (§34-27-36).
Hearing. At least 15 days’ notice; you may appear with counsel and examine witnesses. A written order follows within 30 days of the hearing (§34-27-37).
Penalty.$100 to $5,000 per violation, alongside reprimand, extra coursework, suspension or revocation.
Rehearing. Ask within 30 days, naming the grounds. Asking does not delay the order.
Appeal. Within 30 days of the final order, to circuit court, with a $200 bond; the appeal does not stay the order unless the court stays it (§34-27-38).
The Recovery Fund is the last resort
Pays court judgments against licensees that cannot be collected: up to $25,000 per transaction and $50,000 per licensee. It covers only conduct in Alabama, and only after the court case and any appeals are over. Once it pays, the Commission may terminate that licensee’s licenses and refuse a new one until the money is repaid with 12% interest (§34-27-31).
Ten days to report a lawsuit
A licensee must notify the Commission in writing by certified mail within 10 days of being served with a civil suit about a real estate transaction, or of a criminal charge, and again within 10 days of a verdict, judgment or dismissal (§34-27-31(j)–(k)).