Key Takeaways
- RECAD requires licensees to provide the Real Estate Brokerage Services Disclosure form to all consumers
- The RECAD form must be provided as soon as reasonably possible and before any confidential information is disclosed
- Licensees must sign and date the RECAD form; consumer signature is preferred but not required
- Business entities (corporations, LLCs, partnerships, trusts, government entities) are exempt from RECAD
- Recent legislative changes (Act 2025-59 and Act 2025-380) have updated RECAD requirements
Real Estate Consumers Agency and Disclosure Act (RECAD)
The Real Estate Consumers Agency and Disclosure Act (RECAD) is Alabama's primary law governing agency disclosure and consumer protection in real estate transactions.
Purpose of RECAD
RECAD requires AREC to create a Real Estate Brokerage Services Disclosure form that describes the alternative types of brokerage services available to consumers in Alabama transactions.
Key Point: The RECAD form is mandatory for virtually all residential real estate transactions in Alabama.
When to Provide the RECAD Form
The RECAD form must be provided to the consumer:
- "As soon as reasonably possible"
- Before any confidential information is disclosed to any other person by a licensee
Timing Guidelines
| Situation | When to Provide |
|---|---|
| Listing presentation | At first substantive contact |
| Buyer inquiry | Before discussing needs or finances |
| Open house | Before substantive conversation |
| Referral | Before any confidential discussion |
Who Must Receive the RECAD Form
The RECAD form is required for all consumers except:
Entities Exempt from RECAD
- Corporations
- Nonprofit corporations
- Professional corporations
- Professional associations
- Limited liability companies (LLCs)
- Partnerships (including those under the Uniform Partnership Act)
- Real estate investment trusts (REITs)
- Business trusts
- Charitable trusts
- Family trusts
- Government entities
Important: Individual consumers (buyers and sellers of residential property) are NOT exempt and must receive the RECAD form.
RECAD Form Requirements
Licensee Signature
The Alabama Real Estate Commission requires the licensee to:
- Sign the RECAD form
- Date the RECAD form
- Provide a copy to the consumer
Consumer Signature
| Requirement | Status |
|---|---|
| Consumer signature required by law | No |
| Consumer signature preferred | Yes |
| If consumer refuses | Note refusal and date on form |
Practice Tip: Although not legally required, obtaining the consumer's signature provides documentation that the disclosure was made.
Agency Disclosure Office Policy (ADOP)
In addition to the RECAD form, brokers must:
- Adopt and maintain an Agency Disclosure Office Policy (ADOP)
- Provide ADOP to consumers at the same time as the RECAD form
- Include in ADOP the types of brokerage services the company offers
RECAD vs. ADOP
| Document | Purpose |
|---|---|
| RECAD Form | Describes what Alabama law allows |
| ADOP | Describes what your company specifically offers |
Key Distinction: The RECAD form explains legal options in Alabama; the ADOP explains what your brokerage actually provides.
Recent Legislative Changes
Alabama has recently updated RECAD through:
| Act | Effective Date | Changes |
|---|---|---|
| Act 2025-59 | May 1, 2025 | Updated disclosure requirements |
| Act 2025-380 | October 1, 2025 | Additional procedural changes |
Exam Note: Stay current on recent legislative changes—they are frequently tested on the Alabama state exam.
When must the RECAD form be provided to a consumer?
Which of the following is EXEMPT from receiving the RECAD form?