National Property Characteristics and Use
Not publishedof exam
11 Scored ItemsFixturesLegal DescriptionsLand Controls
National Ownership and Title
Not publishedof exam
9 Scored ItemsEstatesDeedsRecording
National Value and Appraisal
Not publishedof exam
11 Scored ItemsValue PrinciplesAppraisal ApproachesCMA and BPO
National Contracts and Agency
Not publishedof exam
16 Scored ItemsContract TypesValidityAgency Duties
National Real Estate Practice
Not publishedof exam
10 Scored ItemsListingsFair HousingRisk Management
National Disclosures and Environment
Not publishedof exam
9 Scored ItemsMaterial FactsHazardsEnvironmental Liability
National Financing and Settlement
Not publishedof exam
7 Scored ItemsLoan ProgramsFederal RulesClosing
National Real Estate Math
Not publishedof exam
7 Scored ItemsAreaValuation MathClosing Math
Alabama Commission Role
Not publishedof exam
1 Scored ItemARECPublic ProtectionRulemaking
Alabama Licensing Requirements
Not publishedof exam
7 Scored ItemsQualificationsEducationRenewal
Alabama License Status
Not publishedof exam
2 Scored ItemsTransferInactive StatusReactivation
Alabama Brokers and Companies
Not publishedof exam
5 Scored ItemsQualifying BrokerCompany LicenseBranch Office
Alabama Recovery Fund
Not publishedof exam
2 Scored ItemsCompensatory DamagesFund LimitsRepayment
Alabama Discipline Process
Not publishedof exam
2 Scored ItemsComplaintsHearingsAppeals
Alabama Estimated Closing Statement
Not publishedof exam
1 Scored ItemWritten OffersCost EstimatesDated Receipt
Alabama Trust Funds
Not publishedof exam
2 Scored ItemsImmediate DeliverySeparate AccountQualifying Broker
Alabama RECAD
Not publishedof exam
3 Scored ItemsTransaction FacilitatorAgency AgreementsDesignated Single Agency
Alabama Disciplinary Violations
Not publishedof exam
15 Scored ItemsMisrepresentationAdvertisingCompensation
Quick Facts
- Credential
- Salesperson
- Provider
- Pearson VUE
- General scored
- 80 items
- Alabama scored
- 40 items
- Pretest
- 10-15 unscored items
- General time
- 2.5 hours
- Alabama time
- 1 hour
- Pass score
- Scaled 70
- Exam fee
- $73
- Authorization
- 6 months
- Passing result
- Valid 90 days
- Calculator
- Online calculator only
Government Powers
Police, Eminent domain, Escheat, Taxation
Police regulatesEminent domain takesEscheat receivesTaxation funds
Real vs Personal Property
Real property
- Land and attachments
- Transfers by deed
Personal property
- Movable items
- Transfers by bill-of-sale
Apply attachment intent
Property Characteristics and Use
- Fixture
- Personal property becomes real
- Trade fixture
- Tenant business item
- Emblements
- Cultivated annual crops
- Attachment
- Personal becomes real
- Severance
- Real becomes personal
- Metes and bounds
- Directions, distances, monuments
- Lot and block
- Recorded plat reference
- Government survey
- Township, range, sections
- Police power
- Regulates property use
- Eminent domain
- Taking with compensation
- Escheat
- Ownerless property transfers to state
- Easement
- Nonpossessory use right
Fixture Test
Method, Adaptation, Relationship, Intention, Agreement
Agreement controlsIntention usually dominates
Actual vs Constructive Notice
Actual notice
- Direct personal knowledge
- Expressly learned fact
Constructive notice
- Public record available
- Law presumes knowledge
Recording creates constructive notice
Ownership and Title
- Fee simple
- Greatest ownership estate
- Life estate
- Measured by a life
- Estate for years
- Fixed lease term
- Periodic estate
- Renews until notice
- Tenancy in common
- Separate undivided shares
- Joint tenancy
- May include survivorship
- Severalty
- Ownership by one entity
- Lien
- Monetary title encumbrance
- Constructive notice
- Public record gives notice
- Marketable title
- Free from reasonable doubt
- Quitclaim deed
- Conveys existing interest only
- General warranty deed
- Broadest deed covenants
Value Characteristics
Demand, Utility, Scarcity, Transferability
Demand wantsUtility servesScarcity limitsTransferability conveys
Market Value vs Market Price
Market value
- Opinion under conditions
- Most probable price
Market price
- Actual amount paid
- May differ from value
Value is estimated; price happened
Appraisal Method Picker
- Many comparable homes→Sales comparison(Adjust comparables)
- New special-purpose building→Cost approach(Deduct depreciation)
- Income property→Income approach(Capitalize NOI)
- One-to-four unit rental→GRM(Price divided rent)
- Seller needs pricing→CMA(Not an appraisal)
- Lender requests broker estimate→BPO(Follow applicable law)
Value and Appraisal
- Market value
- Most probable competitive price
- Market price
- Actual transaction amount
- Substitution
- Comparable ceiling on value
- Highest and best use
- Legal, feasible, most productive
- Sales comparison
- Adjust comparable sales
- Cost approach
- Land plus cost minus depreciation
- Income approach
- Capitalizes future benefits
- CMA
- Licensee pricing analysis
- BPO
- Broker price opinion
- Physical deterioration
- Wear and damage
- Functional obsolescence
- Design deficiency
- Economic obsolescence
- External value loss
Client Duty Cluster
Loyalty, obedience, disclosure, confidentiality, accounting, care
Client receives advocacyAll parties receive honesty
Void vs Voidable
Void
- No legal effect
- Cannot be ratified
Voidable
- Valid until rescinded
- Protected party decides
Ask whether validity ever existed
Contract Status Picker
- Missing legal essential→Void(Never enforceable)
- Protected party may cancel→Voidable(Valid until rescinded)
- Writing requirement unmet→Unenforceable(Court remedy barred)
- All duties completed→Executed(Fully performed)
- Duties remain→Executory(Performance pending)
- Terms materially change→Counteroffer(Original rejected)
Contracts and Agency
- Bilateral contract
- Promise exchanged for promise
- Unilateral contract
- Promise exchanged for performance
- Valid
- All legal essentials present
- Void
- No legal effect
- Voidable
- One party may rescind
- Unenforceable
- Court remedy unavailable
- Executed
- Fully performed
- Executory
- Performance remains due
- Counteroffer
- Rejects original offer
- Option
- Keeps offer open
- Equitable title
- Buyer interest after contract
- Agency
- Fiduciary representation relationship
Real Estate Practice
- Exclusive right-to-sell
- Broker paid whoever sells
- Exclusive agency
- Owner sale avoids commission
- Open listing
- Procuring broker earns commission
- Net listing
- Creates broker conflict
- MLS
- Broker cooperation system
- Property management
- Manages property for owner
- Price fixing
- Illegal competitor agreement
- UPL
- Unauthorized legal practice
- Fair Housing Act
- Protects seven federal classes
- ADA
- Public accommodation accessibility
Disclosures and Environment
- Material fact
- Influences reasonable decision
- Latent defect
- Hidden property defect
- Lead disclosure
- Applies pre-1978 housing
- CERCLA
- Federal cleanup liability
- Phase I
- Records and site review
- Phase II
- Environmental sampling and testing
- Radon
- Radioactive soil gas
- Asbestos
- Friable fibers create danger
- Mold
- Moisture-driven growth
- Flood zone
- May trigger insurance requirements
Housing Payment Parts
Principal, Interest, Taxes, Insurance
Principal reduces balanceInterest pays lender
FHA vs VA Loans
FHA
- Federal insurance
- Uses mortgage insurance premium
VA
- Federal guaranty
- Eligible service borrowers
FHA insures; VA guarantees
Financing and Settlement
- Promissory note
- Evidence of debt
- Mortgage
- Lien securing note
- LTV
- Loan divided by value
- FHA loan
- Federally insured loan
- VA loan
- Federally guaranteed loan
- PMI
- Conventional mortgage insurance
- MIP
- FHA mortgage insurance
- Primary market
- Originates mortgage loans
- Secondary market
- Purchases existing loans
- TILA
- Consumer credit cost disclosure
- RESPA
- Bans settlement kickbacks
- TRID
- Loan Estimate plus Closing Disclosure
Math Formula Picker
- Need acreage→Square feet ÷ 43,560(Memorize conversion)
- Need commission→Price × rate(Convert percent)
- Need NOI→Income minus expenses(Exclude debt service)
- Need property value→NOI ÷ cap rate(Income approach)
- Need cap rate→NOI ÷ value(Decimal result)
- Need loan amount→Value × LTV(Use lender value)
- Need equity→Value minus debt(Owner interest)
- Need simple interest→Principal × rate × time(Match time units)
Real Estate Math
- One acre
- 43,560 square feet
- One mile
- 5,280 feet
- Commission
- Price times rate
- NOI
- Effective income minus operating expenses
- Cap rate
- NOI divided by value
- Income value
- NOI divided by cap rate
- Loan amount
- Value times LTV
- Discount points
- Loan times points rate
- Simple interest
- Principal times rate times time
- Equity
- Value minus debt
- GRM
- Price divided by rent
- Proration
- Use stated year convention
Scaled Score vs Raw Percent
Scaled score
- Adjusted across exam forms
- Passing threshold equals 70
Raw percent
- Percent answered correctly
- Not reported passing rule
Seventy is not seventy percent
Commission Role
- AREC
- Alabama licensing regulator
- Pearson VUE
- Examination provider
- License law
- Protects Alabama public
- Commission rules
- Govern licensed practice
Licensing Requirements
- Minimum age
- 19 years
- Immigration status
- Citizen or lawful permanent resident
- Residency
- Any United States state
- Education baseline
- High school or GED
- Prelicense course
- 60 clock hours
- Course grade
- Minimum 70
- Exam window
- Six months after course
- Licensed activity
- Services for expected compensation
- Out-of-state cobroker
- Written Alabama broker agreement
- Postlicense education
- Temporary-license requirement
License Status
- Active status
- May perform licensed acts
- Inactive status
- No licensed activity
- License transfer
- Requires commission processing
- Reactivation
- Meet current requirements
- Registration
- Tied to specific office
Brokers and Companies
- Qualifying broker
- Supervises company licensees
- Broker responsibility
- Includes entrusted funds
- Company license
- Required business authority
- Branch office
- Requires branch licensing
- Associate broker
- Works under qualifying broker
- Temporary qualifying broker
- Maintains company continuity
- Home office
- Must satisfy office rules
- Broker supervision
- Reviews practice and compliance
Recovery Fund
- Covered loss
- Actual compensatory damages
- Excluded amounts
- Interest and court costs
- Location
- Conduct within Alabama
- Own or family property
- Licensee acts excluded
- Original-license fee
- $30 fund contribution
- License restoration
- May require fund repayment
Discipline Process
- Complaint
- Starts alleged violation review
- Probable cause
- Supports formal proceeding
- Hearing
- Evidence and testimony considered
- Discipline
- May fine, suspend, revoke
- Rehearing
- Commission reconsideration request
- Appeal
- Judicial review path
Estimated Closing Statement
- Transaction scope
- Single-family residential sale
- Trigger
- Each written offer or counteroffer
- Contents
- Best estimates of closing costs
- Amounts
- Approximate each expected cost
- Acknowledgment
- Dated consumer signature
- Retention
- Qualifying broker file
Commingling vs Conversion
Commingling
- Mixes funds improperly
- Ownership remains unchanged
Conversion
- Uses another's funds
- Wrongful possession or spending
Mixing differs from taking
Alabama Funds and Offer Picker
- Salesperson receives funds→Deliver broker immediately(Do not hold)
- Broker holds trust funds→Separate insured account(Alabama institution)
- Parties dispute funds→Hold pending authority(Agreement or court)
- Buyer signs written offer→Give cost estimate(Obtain dated signature)
- Seller receives written offer→Give cost estimate(Obtain dated signature)
- Counteroffer changes costs→Give updated estimate(Every written counteroffer)
Trust Funds
- Salesperson receipt
- Deliver broker immediately
- Trust account
- Separate federally insured account
- Account location
- Alabama financial institution
- Account authority
- Qualifying broker included
- Deposit responsibility
- Qualifying broker
- Written relief
- May shift broker responsibility
- Disputed funds
- Agreement or court order
- Commingling
- Mixing client and business funds
Client vs Customer
Client
- Written agency agreement
- Receives loyalty and advocacy
Customer
- No agency representation
- Receives statutory baseline duties
Agency requires written agreement
RECAD Relationship Picker
- No written agency agreement→Transaction facilitator(Nonagent default)
- Represent one party→Single agency agreement(Written bilateral contract)
- One licensee represents both→Dual agency(Written informed consent)
- Separate in-house agents→Designated single agency(Not dual agency)
- Before brokerage services→Provide office policy(Consumer receives policy)
- Before confidential disclosure→Provide RECAD form(Seek signature)
- Consumer refuses signature→Note refusal(Keep completed form)
- Listing or submitting offer→Written brokerage agreement(Compensated services)
RECAD Relationships
- Single agent
- Represents only one party
- Dual agent
- One licensee represents both
- Transaction facilitator
- Nonagent assists parties
- Default relationship
- Transaction facilitator
- Agency creation
- Written bilateral agreement
- Dual agency
- Prior written informed consent
- Designated single agents
- Separate agents, separate clients
- Designated result
- Not dual agency
- Disclosure form
- Before confidential information disclosure
- Office policy
- Before brokerage services
- Consumer refusal
- Note refusal on form
- Showing property
- No agency agreement required
Single Agent vs Facilitator
Single agent
- Represents one client
- Owes client loyalty
Transaction facilitator
- Represents no party
- Assists without advocacy
No writing means facilitator
Dual vs Designated Single Agency
Dual agent
- One licensee represents both
- Needs written informed consent
Designated single agents
- Separate licensees represent parties
- Not dual agency
Count licensees representing parties
Disciplinary Violations
- Misrepresentation
- False material statement
- Dishonest dealing
- Bad-faith transaction conduct
- Contract interference
- Inducing unjustified breach
- Advertising
- Must identify licensed company
- Unlicensed compensation
- Prohibited commission payment
- Rebate
- Giving or receiving prohibited
- Personal interest
- Requires timely written disclosure
- Written offers
- Present timely and truthfully
- Sale terms
- Disclose true transaction terms
- Transaction documents
- Deliver and retain properly
- Required records
- Maintain broker files
- Commission order
- Violation triggers discipline
Common Traps
Scaled Passing Score
Scaled 70 passes ≠ Seventy percent is not required
Two Exam Portions
General has eighty scored ≠ Alabama has forty scored
Unidentified Pretest Items
General adds five ≠ Alabama adds five-to-ten
Current RECAD Language
Say transaction facilitator ≠ Subagency was removed
Trust Fund Timing
Salesperson delivers immediately ≠ Qualifying broker controls deposit
Calculator Policy
Personal calculators prohibited ≠ Online calculator provided
Memorized Math Facts
Acre equals 43,560 square feet ≠ Mile equals 5,280 feet
Last Minute
- 1.Know 80 plus 40 scored
- 2.Expect 10-15 unscored pretests
- 3.Scaled 70 is not percent
- 4.Bring two signature IDs
- 5.Arrive thirty minutes early
- 6.Use only online calculator
- 7.Memorize acre and mile conversions
- 8.Default relationship equals facilitator
- 9.Dual means one licensee both
- 10.Designated singles are not dual
- 11.Deliver trust funds immediately
- 12.Prepare every required cost estimate
- 13.Retake entire exam after failure
- 14.Apply within ninety days
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