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  • pg 1
									WINTER 2007

 Sign of the Times and Unlicensed Activity
                                                By D. Philip Lasater, Executive Director

          ou knew it required a real estate       established by the legislature. And likewise   Fines equivalent to those Commissioners
          license to engage in real estate        the Commission’s jurisdiction extended         may levy against licensees may be levied
          brokerage. Now it is unlawful to        only to those individuals who held a           against unlicensed individuals and in addi-
engage in real estate brokerage without a         license. With the new Act, the Commission      tion they may impose a fine in the amount
license.                                          now has jurisdiction over individuals who      of any gain or economic benefit derived
   I would draw your attention to two             practice real estate without a real estate     from a transaction. Failure to comply can
notices within this edition. One is notice of     license. The Act authorizes the Com-           be enforced by civil court.
Act 2006-601 becoming effective October           mission to issue cease and desist orders          This new Act is not to be confused as
1 and the other is the rule amendment clar-       which would likely be the first step taken     interfering in any way with the existing
ifying how a real estate company is proper-       upon our learning of the unlawful practice     “owners” exemption within license law.
ly identified as a real estate office.            of real estate. If that is not effective or    Any individual may sale or lease property
   The primary purpose of the real estate         given other circumstances where transac-       he or she owns without being required to
commission has been to insure that indi-          tions involving consumers have been com-       have a real estate license. The Act does not
viduals applying for real estate sales and        pleted, the Commission may issue formal        change that. The Act addresses the circum-
brokers licenses meet the qualifications as       complaints, subpoenas, and hold hearings.                                     (Continued on page 2)

  New Appointments to Nine Member Commission
                                                  real estate career twenty-seven years ago      Alabama Association of REALTORS®
                                                  and since 1989 her company has special-        Arthur B. Pope Education Achievement
                                                  ized in property management and residen-       and Alabama Association of REALTORS®
                                                  tial sales.                                    Long Serving Committee Member Award.
                                                     Commissioner Morris’ distinguished                                         (Continued on page 5)
                                                  real estate career includes serving in vari-
                                                  ous leadership positions in the Alabama
                                                  Association of REALTORS®, National               In This Issue
Janet R. Morris         Dorothy P. Riggins        Association of REALTORS®, Alabama                Act 2006-601: An Explanation.................. 2
                                                  CRS Chapter, National Women’s Council            New Rule Changes

            e are pleased to announce the         of REALTORS®, Alabama Women’s                    Effective October 1, 2006 ............................ 3
            appointment of Janet R. Morris        Council of REALTORS® and Montgomery              Briefly Legal: Earnest Money Disputes..... 4
            and Dorothy P. Riggins to the         Women’s Council of REALTORS®.                    Education Corner: Stress-Free CE ............ 5
Alabama Real Estate Commission. The                  In addition to her leadership roles,          Disciplinary Actions Taken........................ 6
new Commissioners were appointed by               Commissioner Morris has been the recipi-         Licensing Tidbits....................................... 8
Governor Bob Riley and confirmed by the           ent of numerous awards, most notably the           It’s Not Too Late; Renewal Problems;
Alabama Senate during the 2006 Regular            National Association of REALTORS®                  Reminder: Commission’s Fund Receipt
Session.                                          Omega Tau Rho Honor Fraternity,                    Policy; Online Transfers
  Representing the Third Congressional            Alabama Association of REALTORS®                 New Employees Join Commission Staff .. 9
District is Janet R. Morris owner and bro-        Robert Jemison, REALTOR® of the Year,            Tax Rules for Foreign Investors
ker of Morris VIP Realty in Montgomery,           Top Forty REALTORS®, Alabama Asso-               in U.S. Property .......................................10
Alabama. Commissioner Morris began her            ciation of REALTORS® Honor Society,
Sign of the Times...                               otherwise listed. It will continue to be           do not carry pocket cards referral to the
Continued from page 1                              important for anyone who has knowledge             Association of Real Estate License Law
                                                   of illegal or unlicensed activity to report to     Officials license/registration search Web
stances where someone would procure                the Real Estate Commission. Our investi-           site www.arello.com would be the fastest
prospects for or list for sale or lease or show    gators and attorneys need the opportunity          and most efficient way for another licensee
property on behalf of another he or she does       to evaluate situations that potentially            or consumer to verify whether an individ-
not own. In other words, any activity              require our intervention or action.                ual is licensed in Alabama or any other
requiring a real estate license set out in            Enactment of the authority is the first         jurisdiction.
Section 34-27-30 performed by an unli-             step in compliance and enforcement.                   The second area to which I draw your
censed person now becomes subject to the           Education of licensees and the general             attention relates to the signage of the place
Commission’s enforcement jurisdiction.             consumer public will be an important               of business. The statute states that a real
   There are individuals acting in isolated        aspect over the coming months.                     estate company among other things shall
instances that for whatever reason do not          Commissioners are currently evaluating             be properly identified as a real estate
understand this and generally upon learn-          the cost feasibility and potential effective-      office. The place of business rule as
ing will cease and desist and become               ness of a statewide public information             amended defines the minimum standard
licensed or let their business idea go. There      campaign. The purpose would be to inform           for how compliance with this requirement
are other more deliberate attempts to cir-         the public that any real estate transaction in     is met. (See Rule 790-X-2.-07 in the
cumvent by deceit or fraud actual real             which they do not own the property for             revised insert of the License Law book.)
estate transactions on behalf of others            which buyers or tenants are being solicited           At least once every five years a broker
without having met the qualifications for          requires using a licensed real estate sales-       and company should incur a random com-
having a license issued and the authoriza-         person or broker. How does one determine           pliance audit from the Commission. The
tion it allows. Experience from other juris-       if an individual is licensed or not? Every         Audit checklist which may be referenced
dictions alerts us particularly to unlicensed      company and broker are required by                 in the back of the license law book on page
individuals who would link qualification           license law to have the licenses of those for      A-2 will now contain, along with all the
and approval for consumer financing to             which they are responsible for available for       other items on the check list, review of how
properties they do not own nor may not be          public viewing. Since Alabama licensees            the company signage meets the rule.        ■

    Act 2006-601: An Explanation
    The license law has been amended to include some new provi-               (3) the amount of the Commission’s costs incurred. These
    sions regarding practicing real estate without a license and the          provisions are incorporated into Section 34-27-36 Ala. Code.
    extent of the Commission’s jurisdiction. Some explanation is in
    order to help in understanding these provisions, because they are       Jurisdiction
    significant.                                                            Until now the Commission’s jurisdiction was limited to Alabama
                                                                            real estate transactions. This meant that only those transactions
    Unlicensed Activity                                                     that had the major provisions of the negotiations, etcetera con-
    Until now the Commission had no jurisdiction over unlicensed            ducted in Alabama were subject to the requirements for an
    activity. What this means is that the Commission had no authori-        Alabama real estate license. This also meant, for example, that
    ty to deal directly with persons and companies who engaged in the       out-of-state companies could list Alabama real estate on their
    practice of real estate without being licensed. The new act changes     Web sites and claim that this activity did not require an Alabama
    that and has two key provisions. Now the Commission will be able        real estate license, since the listing, selling, etcetera occurred out-
    to issue cease and desist orders to persons and companies who           side Alabama. The new provisions make it clear that an Alabama
    are practicing real estate without a license. In addition, the          real estate license is required any time one engages in any activ-
    Commission now has authority to hold a hearing, and to impose           ity requiring a license concerning real estate situated within the
    a fine for these activities. The fine may be calculated as follows:     state of Alabama. In other words the mere fact that Alabama real
                                                                            estate is the subject of the transaction activities will make an
      (1) the same fine as may be imposed upon licensees for                Alabama real estate license mandatory, regardless of where the
      violations of the law, and in addition (2) a fine in the amount       listing, selling, etcetera occurred. These provisions are incorpo-
      of any gain or economic benefit derived, and in addition              rated into Section 34-27-30 Ala. Code.

2                                                                                                                                         WINTER 2007
   New Rule Changes Effective October 1, 2006
   790-X-3.-03. Deposit of Funds.                                          ker’s license to be issued. No refund shall be made of any fee or
   (1) The deposit and accounting for at all times of all funds            recovery fund deposit pertaining to the salesperson’s, broker’s, or
   belonging to or being held for others in a separate federally           company’s license.
   insured account or accounts in a financial institution located in
   Alabama shall require that the qualifying broker be a customer of       790-X-2.-07. Place Of Business and Signage
   the financial institution holding all such accounts and the qualify-    A place of business shall be identified by a sign which sets out
   ing broker shall have full authority to deposit and withdraw funds      the name of the company as licensed with the commission. In
   and to write or make checks as necessary on all such accounts.          places where an exterior sign is permitted a sign shall be posted
                                                                           outside of the office so that it is plainly and readily visible to the
   Explanation                                                             public. In places where an exterior sign is not permitted, an inte-
   It has come to the attention of commissioners that some compa-          rior sign shall be posted. The interior sign shall be in keeping with
   nies have qualifying brokers who are not authorized to write checks     the building restrictions, and if permitted, shall be posted in the
   on the company escrow accounts. The rule change will prevent a          entry area and on the door of the office or suite of offices.
   company from engaging the services of a real estate qualifying bro-     Appropriate files and records shall be maintained in the place of
   ker who does not have full authority as a signatory on the compa-       business.
   ny escrow accounts. It should also insure that the broker has
   access to the bank statements thereby increasing the broker’s           Explanation
   accountability. The rule is not intended to prevent a company or        The place of business requirements of the law set out in Section
   broker from designating other signatories on the escrow accounts.       34-27-2(a)(11) require that a place of business be “properly
                                                                           identified as a real estate office.” This rule says that a sign reflect-
   790-X-2-.21. License Transfers. Repealed                                ing the company name is required to satisfy the requirement of the
   (1) A $25.00 fee shall be required of a licensee when a change on       law. Of course, some building restrictions and some local zoning
   a license certificate necessitates the issuance of a new license        restrictions will dictate what exact kind of signage is appropriate.
   certificate, i.e., name change, address change, transfer, etc.          The rule is designed to accommodate those restrictions. If an out-
   (2) The qualifying broker is responsible for the immediate return       side sign is permitted, one must be posted. If not, an interior sign
   of any license certificate which is in need of any change.              or signs must be posted, consistent with what is allowed locally.
                                                                           790-X-1-.12. was amended to specify the acceptance of
   Paragraph (1) of this rule was repealed because transfer fees are
                                                                           ARELLO-certified distance education courses as reciprocal
   set out in the law. Paragraph (2) was repealed so that license cer-
                                                                           CE credit.
   tificates would not have to be returned to accommodate online
                                                                           (15) Any licensee who completes a continuing education class-
   transfers. It is important to note that this rule does not change the
                                                                           room course or an ARELLO certified distance education course in
   places in the law where license certificates are required to be
                                                                           another state which is approved by any state may receive credit
   returned. Here are the pertinent parts of those two statutes:
                                                                           in Alabama for successful completion of that course by sub-
   34-27-34. Who may serve as qualifying broker; responsibility            mitting appropriate documentation as prescribed by the
   of qualifying broker; change of broker; termination of qualify-         Commission. Such courses will count as elective continuing edu-
   ing broker’s status.                                                    cation credit only. These courses are not subject to renewal pro-
   (c) A person who wishes to terminate his or her status as quali-        cedures, instructor application and fee or the course review fee.
   fying broker for a licensee may do so by notifying the licensee
   and the commission in writing and sending the licensee’s license
                                                                           Therefore, an Alabama licensee may take either a classroom
   certificate to the commission or verifying in writing to the com-
                                                                           course or an ARELLO certified distance education course while he
   mission that the certificate has been lost or destroyed.
                                                                           or she is physically in another state and receive credit for that
   Section 34-27-35. License certificates generally.                       course by submitting proper documentation. The documentation
   (f) The license of a salesperson who is subsequently issued a           includes verification the licensee successfully completed the
   broker’s license automatically terminates upon the issuance of          course, verification the course is approved by any real estate com-
   his or her broker’s license certificate. The salesperson’s license      mission and the number of hours for which the course is
   certificate shall be returned to the commission in order for a bro-     approved. The credit received can be up to 12 elective hours of CE.

WINTER 2007                                                                                                                                           3
                                                         BRIEFLY LEGAL
                     EARNEST MONEY DISPUTES
                                                 By Charles R. Sowell, General Counsel

                                                   This means the property management
                                                   company is free to apply the terms of the
                                                   agreement, and disburse funds received
                                                   under the terms of the agreement. This
                                                   includes forfeiture of the security deposit.
                                                   The property management company is not
                                                   required under any circumstances to get
                                                   written permission from the tenant to for-
                                                   feit all or part of a security deposit.
                                                                                                        When the parties just cannot agree, then

            e get many, many questions                Earnest money under a sales contract is
            about this subject. The answers        different. A sale is not consummated until it     the broker must continue to hold the money
            are found in Alabama Real              is closed. Pay careful attention to what the      in the escrow account. Brokers usually do
Estate Commission Rule 790-X-3-.03(4)              rule says about a sale that does not close.       not file an interpleader action, because that
and (5.) Here is what the relevant part of the     The reason it does not close does not mat-        requires a lawsuit with court costs and
rule says with underlining for emphasis:           ter. It does not matter if a financing contin-    attorney’s fees. Some contracts provide that
                                                   gency cannot be met, for example. It does         the earnest money can be used to pay these
790-X-3.-03. Deposit of Funds.                     not matter what the contract says. Even if        expenses right out of the earnest money in
    (4) Each qualifying broker shall               the contract says the earnest money is “non-      the event an interpleader action is filed.
    promptly disburse to the appropriate           refundable,” whatever that means, the rule        Perhaps the best remedy is for one party to
    party or parties any trust funds within        controls. If the money is supposedly “non-        file a civil action against the other for the
    7 days of the consummation of the              refundable,” what is it doing in an escrow        money. Small claims courts are appropri-
    transaction for which the funds were           account? If it is truly non-refundable, then      ate, provided the amount in dispute does
    deposited. If for any reason the trans-        it should be paid directly to the seller under    not exceed $3,000. When a judge enters an
    action is not consummated, or if for           a written, signed addendum to the contract        order deciding the question, the rule allows
    any reason there is a disagreement             clearly setting out the fact that the broker is   the broker to disburse the money to the pre-
    involving to whom trust funds should           relieved of responsibility for the money.         vailing party. Another possible remedy lies
    be disbursed, the qualifying broker               The rule says flatly that if a sale does not   with the State Treasurer’s office. In some
    shall not disburse any trust funds             close, or if there is some dispute about to       circumstances a broker might be able to pay
    except pursuant to a written agreement         whom the earnest money should be dis-             the money over to the State Treasurer’s
    signed by all parties or pursuant to a         bursed, the broker shall not disburse the         office as unclaimed property, provided
    court order.                                   money without written, signed authoriza-          three years have lapsed since the apparent
                                                   tion from the parties to the contract. This       owner last communicated to the broker an
    (5) This Rule shall not prohibit a bro-
                                                   authorization may not be contained in the         interest in the money. The State Treasurer’s
    ker from depositing with the appropri-
                                                   original contract or addendum to it. I will       Web site has information regarding
    ate court any trust funds which are the
                                                   repeat: It does not matter what the contract      unclaimed property that is easy to access.
    subject of disagreement among or
                                                   says. There must be a separate, written and          If you are waiting for an exception to the
    between parties under the rules of
                                                   signed authorization coming after it is           rule, there is one. It concerns foreclosed
    interpleader or other lawful procedure.
                                                   established that that contract will not close.    upon sellers. Here is the scenario. The seller
  First, let’s look at how this rule is            Notice the rule does not require the parties      (owner) has entered into a contract that is
applied to security deposits in property           to give a full release of all claims. The par-    waiting to be closed. During this time the
management situations. A lease or rental           ties usually do want to do this so they can       seller is foreclosed upon, and the sale does
agreement is consummated when a tenant             walk away without any further conse-              not close. In this case it is not necessary to
enters into a lease agreement or deposit           quences. Brokers typically encourage a full       get authorization from the seller to disburse
agreement with the landlord or its agent.          release for this reason.                          the earnest money to the buyer. The law in

4                                                                                                                                      WINTER 2007
Alabama is that a foreclosed upon owner of property is
essentially stripped of all interest in the property, except                    EDUCATION CORNER
the owner’s right to redeem the property within one year.
This is commonly referred to as the statutory right of
redemption. Since this is the only right remaining, the
                                                                        STRESS-FREE CE
seller’s signature on a disbursement authorization is                           By Ryan Adair, Education Director
worthless. Our rule does not supersede the law in this

instance, nor does it require that a worthless signature be               any licensees are convinced that the “CE Year” is always the sec-
obtained.                                                                 ond year of a license period. Well, a clarification needs to be made.
   It is important to understand that this rule governs                   Every year is a “CE Year!” Let me explain why I say that. Approx-
what a broker can and cannot do. The language of the           imately 3,000 licensees were forced inactive on October 1 because of a fail-
contract is very important to establish the rights and         ure to have the proper education requirements for license renewal on record
responsibilities of the buyer and seller. The parties them-    with the Commission. Now, there were many reasons for the absence of edu-
selves and the courts will look to the contract to ulti-       cation qualifications on record, all of which can be avoided in the future. Here
mately decide who is entitled to earnest money when a          are five suggestions to avoid the stress and worry associated with education
contract does not close. Our rule just prevents the broker     required for license renewal:
from being the one who makes the decision. Some other
                                                               1. Take your CE now! Don’t wait until the second year or, much worse,
states have similar rules, while some do not. The reason
                                                                   the last month of the license period. CE is offered throughout the two
for the rule is simple. It protects both the buyer and sell-
                                                                   year license period so go ahead and take your 15 hours now and don’t
er from arbitrary disbursements by brokers. Judges
                                                                   worry about it in September of 2008.
struggle with many contract issues that come before
them in court. Brokers have no business deciding on            2. Make sure the courses you take are approved. You may veri-
their own who is entitled to earnest money.               ■        fy the approval of courses by using the Real Estate Course Search feature
                                                                   on the Commission’s Web site. All approved course offerings are required
                                                                   to be entered into CMap for public viewing prior to their offering. Make
New Appointments to Commission...                                  use of the Real Estate Course Search to verify approval of courses.
Continued from page 1
                                                               3. Provide proper documentation for out-of-state courses. If
                                                                   you take a CE course while in another state and it is approved by any state,
   Commissioner Morris is an active member of
                                                                   you may receive credit in Alabama for successful completion of that
Heritage Baptist Church. She is married to Wayne and
                                                                   course. The Commission will accept up to 12 elective hours of CE credit
they have a son and daughter.
                                                                   for courses taken while physically in another state. The course may be a
   Serving in the consumer-at-large commission posi-
                                                                   classroom course or an ARELLO-certified distance education course.
tion is Dorothy P. Riggins. Commissioner Riggins is
                                                                   Proper documentation must be provided to the Commission in order to
employed full-time as an Education Administrator in
                                                                   receive credit.
the Federal Programs Section of the Alabama
Department of Education. A leader and expert in adult          4. Check your credit online. Always check the Commission’s Web site
and education administration, Commissioner Riggins                 two weeks after completing a CE course to make sure your credit has
holds B.S., M.Ed., Ed.S. and Ph.D. degrees. She has                been entered. If you do not see the credit, you must contact the provider
held positions with Trenholm State Technical College               of the course and let them know that the credit can not be viewed.
and Tuskegee University.
   A native Alabamian, Commissioner Riggins is                 5. Reciprocal licensees send documentation prior to the
known in and around Montgomery, for her beautiful                 renewal deadline. All reciprocal licensees who hold active licenses
singing voice and is often the featured singer of the              in another state at the time of Alabama license renewal may provide a
national anthem at local sporting, private and public              copy of that license or a certification of licensure to satisfy the education
events. She is a member of St. John’s A.M.E. Church                requirement for renewal. This must be provided when requested by the
of Montgomery and is a member of Beta Nu Omega                     Commission and prior to the license renewal deadline.
Chapter of Alpha Kappa Alpha, Phi Delta Kappa honor            These five suggestions can help licensees avoid trouble during license
society, Alabama Education Association, Alabama                renewal. You are encouraged to keep a record of these suggestions
State Employees Association, National Education                and make license renewal in 2008 a stress-free and even enjoyable experi-
Association and National Association for the Edu-              ence. Please contact the Education Division at 334.242.5544 if you have
cation of Homeless Children and Youth.             ■           any questions.                                                         ■

WINTER 2007                                                                                                                                   5
                              DISCIPLINARY ACTIONS TAKEN
                                                  June through October 2006

DISPOSITION                                                                               Kevin M. Kendall
                                                                                          Salesperson; Alexander City, Alabama
The below were found guilty for violation
                                                                                          Date of Hearing: June 23, 2006
of Section 34-27-36(a)(16) by presenting
to the Alabama Real Estate Commission,                                                    Fined $1000 and license
as payment for a fee or fine, a check which                                               suspended for 30 days.
was returned unpaid by the bank upon
which it was drawn.                                                                       Carol A. Lersch
                                                                                          Associate Broker; Mobile, Alabama
Jennifer R. Cade                                                                          Date of Hearing: August 18, 2006
Salesperson; Gulf Breeze, Florida                                                         Reprimanded
Date of Hearing: June 23, 2006
Fined $250                                                                                Dorothy M. Walther
                                                                                          Inactive Salesperson; Mobile, Alabama
Kerry C. Glenn                                                                            Date of Hearing: August 18, 2006
Salesperson; Columbus, Georgia                Valley E. O’Neal                            License Revoked
Date of Hearing: June 23, 2006                Inactive Salesperson; Mobile, Alabama
Fined $250                                    Date of Hearing: October 20, 2006           Jeffrey L. Stinson
                                              Fined $250                                  Inactive Salesperson;
Jennifer Eileen Middleton                                                                 Pawley’s Island, South Carolina
Inactive Salesperson;                         Jonathan R. Long                            Date of Hearing: September 15, 2006
Bay Minette, Alabama                          Salesperson; Rainbow City, Alabama          License Revoked
Date of Hearing: June 23, 2006                Date of Hearing: October 20, 2006
Fined $250                                    Fined $250                                  Sara B. Batson
James Ryan Jackson                                                                        Salesperson; Huntsville, Alabama
                                              Deborah Ann Sisley                          Date of Hearing: October 20, 2006
Salesperson; Jasper, Alabama
                                              Salesperson; Daphne, Alabama                Fined $1000 and license
Date of Hearing: August 18, 2006
                                              Date of Hearing: October 20, 2006           suspended for 30 days.
Fined $250                                    Fined $250
Jody Lynn Marsh                                                                           Eunice Y. Baker
Salesperson; Gulf Shores, Alabama             Randy S. Morris                             Associate Broker; Daleville, Alabama
Date of Hearing: August 18, 2006              Qualifying Broker; Mobile, Alabama          Date of Hearing: October 20, 2006
Fined $250                                    Date of Hearing: October 20, 2006           Reprimanded
                                              Fined $250
Jason S. Graviet                                                                          Jimmy A. Dichiara
Temporary Salesperson;                        DISPOSITION                                 Qualifying Broker;
Ardmore, Alabama                                                                          Gulf Shores, Alabama
Date of Hearing: September 15, 2006           The below were found guilty for violation   Date of Hearing: October 20, 2006
Fined $250                                    of Section 34-27-36(a)(19) by failing to    Fined $1000 and reprimanded
                                              comply with Rule 790-X-1-.12(8) and
Kim Smalley Robinson                          Rule 790-X-1-.12(9) by failing to provide   Kenneth E. Harve
Temporary Salesperson;                        to the Commission, upon request, original   Salesperson; Bessemer, Alabama
Clanton, Alabama                              certificates of completion of all the       Date of Hearing: October 20, 2006
Date of Hearing: September 15, 2006           requested hours of approved continuing      Fined $250
Fined $250                                    education courses.
                                                                                          Anne S. Deakle
Karen Shaw-Nichols                            Rodney E. Barstein                          Inactive Salesperson;
Temporary Salesperson;                        Inactive Broker; Birmingham, Alabama        Mobile, Alabama
Chelsea, Alabama                              Date of Hearing: June 23, 2006              Date of Hearing: October 20, 2006
Date of Hearing: September 15, 2006           Fined $1000 and license                     Fined $1000 and license
Fined $250                                    suspended for 30 days.                      suspended for 30 days.

6                                                                                                                       WINTER 2007
DISPOSITION                                       DISPOSITION                                   DISPOSITION
The below were found guilty for violation         The below were found guilty for violation     The below was found guilty for violation
of Section 34-27-36(a)(19) for a real             of Section 34-27-36(a)(8)a. and Section       of Section 34-27-2(a)(11)b. via Section
estate licensee to violate or disregard a         34-27-36(a)(8)b. for failure to deposit and   34-27-36(a)(19) to operate within the city
Commission order by failing to pay an             account for at all times all funds being      limits of a municipality without having
ordered fine.                                     held for others by having a shortage funds    an office place of business that meets
                                                  in this account.                              the requirements of the aforementioned
Christopher Allen Cummings                                                                      section.
Qualifying Broker;                                Clarence P. Evans, Jr.
Orange Beach, Alabama                             and                                           Lorraine S. Nichols
Date of Hearing: June 23, 2006                    Bo Evans Realty and                           Qualifying Broker;
Fined $500                                        Auction Company LLC                           Gulf Shores, Alabama
                                                                                                Date of Hearing: June 23, 2006
Linda M. Bartlett                                 DBA Bo Evans Realty
                                                                                                Fined $1,000
Inactive Salesperson;                             Qualifying Broker;
Birmingham, Alabama                               Prattville, Alabama
                                                  Date of Hearing: August 18, 2006
Date of Hearing: September 15, 2006
License is suspended for one year.                Fined $1,000                                  The below was found guilty of Count #1
                                                                                                for violation of Section 34-27-36(a)(19)
Marie Knight                                      Sunset Properties and                         to fail to comply with Section 34-27-31(j)
Temporary Salesperson;                            John Bobe                                     in the failure of real estate licensee
Orange Beach, Alabama                             Qualifying Broker;                            to notify the Commission within 10 days
Date of Hearing: September 15, 2006               Gulf Shores, Alabama                          of the institution of criminal prosecution
License is suspended for 60 days.                 Date of Hearing: August 18, 2006              against him and subsequent arrest; Count
                                                  Fined $1,500, license suspended               #2 for violation of Section 34-
DISPOSITION                                       for 90 days, suspension                       27-36(a)(23)a. for having entered a plea
                                                                                                of guilty or nolo contendere to, or
The below was found guilty for violation of       stayed pending completion
                                                                                                having been found guilty of or convicted
Section 34-27-36(a)(1) by procuring a             of three hour continuing                      of a felony or a crime involving moral
license by fraud, misrepresentation, or deceit,   education course containing                   turpitude.
or by making a material misstatement of fact      information on trust or escrow
in an application for license and Section 34-                                                   Richard E. Hilley
27-32(a)(5) that states the Commission may
deny a license for having been convicted of                                                     Gulf Shores, Alabama
or plead guilt to a crime of moral turpitude.     DISPOSITION                                   Date of Hearing: June 23, 2006
                                                                                                License revoked;
William Clarence Scruggs, Jr.                     The respondent Martin was found
                                                  guilty of violating Section 34-27-36(a)(3)    appeal pending.
Inactive Temporary Salesperson;
Mobile, Alabama                                   by making a material misrepresentation
Date of Hearing: June 23, 2006                    to the buyer concerning the lot that          DISPOSITION
Licensed Revoked                                  was for sale by his company and
                                                  respondent Fedder was found guilty of         The below were found guilty of Count #1
                                                  violating of Section 34-27-36(a)(2) for       for violation of Section 34-27-36(a)(19)
DISPOSITION                                                                                     to fail to comply with Rule 790-X-3-.01
                                                  failing to see that the actions of Martin
The below was found guilty for violation          complied with the provisions of the cited     for moving his place of business and
of Section 34-27-36(a)(19) by failing to          Code of Alabama.                              failure to notify the commission
comply with Section 34-27-30(10) to pres-                                                       within 30 days of the change; Count #2
ent to the public a company as being able         Robert J. Fedder,                             Section 34-27-2(a)(11)b. for failure to
to perform an act for which a real estate         Qualifying Broker and                         establish a place of business; Count #3
license is required while not actually being                                                    Section 34-27-36(a)(8)a. and Section 34-
                                                  Donald W. Martin,                             27-36(a)(8)b. for failure to properly
licensed as a real estate company.
                                                  Salesperson;                                  account for or remit money coming into
Sonya Bovee-Partridge                             Daphne, Alabama                               his possession which belongs to others;
Qualifying Broker; Enterprise, Alabama            Date of Hearing: July 14, 2006                and Count #4 Section 34-27-36(a)(28)
Date of Hearing: August 18, 2006                  Mr. Fedder fined $500 and                     for failure or refuse to produce a record
Reprimanded                                       Mr. Martin fined $1,000                                            (Continued on page 9)

WINTER 2007                                                                                                                             7
                                              LICENSING TIDBITS
                                              By Annie Hall, Licensing Supervisor

    It’s Not Too Late                           online at www.arec.alabama.gov. An         licenses cannot be activated online.
       The biggest part of the 2006 license     inactive company cannot be renewed         Those activations must be mailed to
    renewal process has come and gone.          online. The fees must be mailed to the     the Commission office. If the activa-
    Hopefully, everyone has received their      Commission office.                         tion forms are mailed by Certified or
    2007-2008 real estate licenses.                Please remember that when you           Registered mail, you may resume
    Licenses not renewed by October 1,          renew your license, that license is        your real estate activities. Activation
    2006 have expired. Real Estate              renewed on inactive status. To activate    forms are processed in the order in
    License Law allows an expired license       the license, individuals must first com-   which they are received.
    to be renewed during the 12-month           plete the required continuing education
    period following the license renewal        courses. You must then complete an         Renewal Problems
    for which the license was current. An       Application for License Activation and        We have some licensees who are
    expired license can be renewed by           submit it with the required activation     performing activities that require an
    paying the license renewal fees plus        fee(s). The application can be obtained    active real estate license, but either
    $150.00 penalty fee. These fees             from our Web site at www.arec.             the company or qualifying broker (or
    must be received in our office or post-     alabama.gov. Once there, click on          both) have not met all renewal
    marked by the US Postal Service by          “Forms and Applications” and down-         requirements, and therefore does not
    September 30, 2007. Failure to renew        load the application. For faster serv-     hold an active real estate license.
    a license by that date will result in a     ice, you may also activate your            Both the company and qualifying
    lapsed license and shall be subject to      license online at the above Web site.      broker must hold an active real estate
    all requirements applicable to persons      From our homepage, click on “Online        license in order for them or agents
    who have never been licensed.               Services” and follow the prompts.          registered to that company to engage
    Individuals may renew their license         Company and qualifying broker              in real estate transactions. Qualifying
                                                                                           brokers must make sure that their
                                                                                           license and their company license

      REMINDER:                                                                            have met all renewal requirements
                                                                                           and the licenses are active. Failure
      Commission’s Fund Receipt Policy                                                     to do so will result in the company,
                                                                                           qualifying broker and all agents
        In accordance with the Alabama Real Estate License Law Rule 790-X-1-               registered to that company being
      .01(2), the Commission adopted the following policy that became effective            placed on inactive status.
      November 21, 2003:
         “It shall be the policy that all fees must be accompanied by the appro-           Online Transfers
         priate corresponding application or form for which the fees are being               Qualifying brokers are notified by
         submitted. The amount of the fees must be exact as set out in the statute         email immediately after an agent
         and as reflected on the most recently revised prescribed application or           completes an online transfer of
         invoice form. Failure to comply in either case will result in the check           his/her license from that company
         or application/form being returned. The return will contain information           followed by written notification. The
         regarding the specific nature of the deficiency and provide 10 business           law requires that licenses be returned
         days from the date of return for receipt of the transaction to accommo-           in cases where the qualifying broker
         date any crossed deadline.”                                                       has terminated his/her status as the
                                                                                           qualifying broker. Otherwise, licenses
        Please be sure to submit appropriate fees, forms and licenses (if applica-         for transfers do not have to be
      ble) for all transactions. Failure to follow the above policy will result in the     returned to the Commission office as
      delay of processing your requests.                                                   provided by the recent repeal of Rule
                                                                                           790-X-2-.21.                        ■

8                                                                                                                            WINTER 2007
 New Employees Join Commission Staff                                                 Disciplinary Actions...
                                                                                     Continued from page 7
    We are pleased to announce and welcome the following people                      in his possession for inspection by the
         to the staff of the Alabama Real Estate Commission.
                                                                                     Corey Demetruis Springs
                  Connie Rembert joined the Education Division in the posi-          and Springs Realty
                  tion of Education Assistant. Connie is relatively new to state     Qualifying Broker;
                                                                                     Montgomery, Alabama
                  service, having spent her career in the non-profit sector in the
                                                                                     Date of Hearing: October 20, 2006
                  Blood Services Unit of the American Red Cross in
                                                                                     Fined $500 each for Counts 1
                  Montgomery. Connie is a graduate of Auburn University of
                                                                                     and 2; Licenses revoked on
                  Montgomery where she received a Bachelor’s in Business             Count 3 and Fined $2,500 on
                  Administration. Connie has one son, Joseph, III.                   Count 4.
Connie Rembert
                  Jamyla Genous recently joined the staff as the Executive           DISPOSITION
                  Assistant to the Executive Director, Philip Lasater. Jamyla
                                                                                     The below were found guilty for viola-
                  has six years public service with the state of Alabama
                                                                                     tion of Rule 790-X-3-.01 via Section 34-
                  and comes to the Real Estate Commission from the Depart-
                                                                                     27-36(a)(19) for a real estate licensee to
                  ment of Rehabilitation Services. Additionally, Jamyla has          change their place of business as set out
                  worked in the Department of Public Health and the Alabama          on their numbered license certificate, and
                  Office of the Attorney General. Jamyla is married to Minister      to fail to notify the commission in writ-
                  Kevin Genous and they are the proud parents of four year           ing within 30 days after the change.
Jamyla Genous     old Kevin, II.                                                     Peter B. Jones
                                                                                     Qualifying Broker;
                  Pam Oates has joined the Education Division in the role of         Dauphin Island, Alabama
                  Education Specialist. Pam holds a Bachelor’s degree in             Date of Hearing: September 15, 2006
                  Education from Troy University and a Master’s degree in            Reprimanded
                  Education from Troy University in Montgomery. While                Wayne Sturgis
                  assisting in all areas of education, Pam’s primary duties are      Qualifying Broker; Marietta, Georgia
                  to audit real estate schools, courses and instructors through-     Date of Hearing: September 15, 2006
                  out the state. Pam began her teaching career in Alabama’s          Fined $250
                  public schools in 1987 and has taught at all grade levels.
Pam Oates                                                                            William T. McLemore
                                                                                     Qualifying Broker; Lebanon, Tennessee
                  Matt Davis, a graduate of Gadsden State Community College          Date of Hearing: September 15, 2006
                  has joined the Information Technology Division in the              Fined $250
                  position of computer programmer. Matt holds an associate
                  degree in Computer Information Systems and an associate
                  degree in Telecommunications. He has completed additional
                                                                                     OTHER ADMINISTRATIVE ACTIONS
                  course work at Jacksonville State University. Matt and his wife    Determination for Licensure
                  Cara just celebrated their first wedding anniversary.              Approved . . . . . . . . . . . . . . . . . . . . . . 21
                                                                                     Denied . . . . . . . . . . . . . . . . . . . . . . . . . 6
Matt Davis
                  Molli Jones has been appointed staff accountant in the             Determination of Eligibility
                  Accounting Division to assist with accounting and business         Approved . . . . . . . . . . . . . . . . . . . . . . 11
                  administration duties of the Commission. Molli has a total of      Denied . . . . . . . . . . . . . . . . . . . . . . . . . 6
                  twenty-one years of public service starting with the Alabama       COMPLAINTS AND INQUIRIES
                  Department of Education. A graduate of Auburn University           HANDLED BY LEGAL AND
                  Montgomery, Molli holds a bachelor’s degree in business            INVESTIGATIVE STAFF
                  administration. Molli who enjoys reading, camping and is           From Licensees . . . . . . . . . . . . . . .2342
                  married to Doug Jones. They are the parents of eleven year         From Public . . . . . . . . . . . . . . . . . . 1237
Molli Jones       old Adam.                                                  ■       Anonymous . . . . . . . . . . . . . . . . . . . 13

WINTER 2007                                                                                                                                  9
     Tax Rules for Foreign Investors in U.S. Real Property
                         By Nora S. Gunn, Senior Stakeholder Liaison, Internal Revenue Service

NOTE: This headliner is current through            There are exemptions to the withholding          income as effectively connected to a
the publication date. Since changes may         requirements of Internal Revenue Code               U.S. trade or business (W-8EIC).
have occurred after the publication date        section 1445. One of the most common            •   Withholding agents must use Form 1042
that would affect the accuracy of this doc-     exemptions to FIRPTA withholding is that            and 1042S to report the tax withheld.
ument, no guarantees are made concern-          the transferee does not have to withhold in     •   The requirement to withhold 30%
ing the technical accuracy after the publi-     a situation where the real property is pur-         extends to the manager of the rental
cation date.                                    chased for use as a residence and the pur-          property if the tenant has not met the
Headliner Volume 162, May 11, 2006              chase price is not more than $300,000. A            30% withholding. Property managers
                                                listing of the exemptions from FIRPTA               who do not comply with these rules will
                                                withholding is in IRS Publication 515,              be held liable for 30% of gross rent, plus

                  real estate licensees and
                                                Withholding of Tax on Nonresident Aliens            penalties and interest.
                  rental agents/property
                                                and Foreign Entities, and at IRS.gov, using
                  managers are encounter-
                                                “FIRPTA” as a key search word.                  Withholding Required on
ing an increasing number of situations
                                                   In certain situations, such as when the      Certain U.S. Real Property
that involve foreign persons, defined as
                                                tax due on the transferor’s gain from the       Transactions Involving Foreign
persons other than U.S. persons, acquir-
                                                sale is less than the withholding, the for-
ing U.S. real property. The tax rules gov-
                                                eign transferor (or the transferee) can
                                                                                                Persons, IRS Warns
erning disposition of any U.S. real proper-
                                                request from the IRS a reduction or elimi-      FS-2005-16, September 2005
ty interest by foreign persons vary in
                                                nation of withholding. The FIRPTA
many ways from those that apply to U.S.                                                            The IRS today reminds all real estate
                                                Withholding section on IRS.gov has more
persons. Understanding the tax laws is                                                          and tax professionals of the withholding
                                                information about reducing the withhold-
critical for real estate professionals to                                                       tax and the filing obligations with respect
                                                ing rate.
avoid personal liability for improper U.S.                                                      to two transactions in which a foreign per-
federal income tax compliance.                                                                  son disposes of a U.S. real property inter-
   The disposition of a U.S. real property      Withholding on Rental Income                    est. The transactions involve the disposi-
interest by a foreign person (transferor) is    Paid to a Foreign Person                        tion by a foreign person of an option or
subject to the Foreign Investment in Real         If a foreign person owns U.S. rental          contract to acquire a U.S. real property
Property Tax Act of 1980 (FIRPTA)               property and receives rental/investment         interest, and the disposition by a foreign
income tax withholding. FIRPTA author-          income not connected with a U.S. busi-          corporation of a U.S. real property interest
ized the United States for the first time to    ness, the renter must withhold a flat rate of   by way of a transfer to a shareholder.
tax foreign persons on disposition of U.S.      30% (without deductions) of the rents,
Real Property Interests (USRPI).                unless a tax treaty provides a lower rate or    Disposition of an Option or
   A USRPI includes any sale of an interest     an exemption. Here are some basic rules         Contract to Acquire a United States
in parcels of real property, as well as sale    regarding withholding on rent:                  Real Property Interest
of any shares in certain U.S. corporations      • IRC section 1441 provides for the with-          Under U.S. tax law, a foreign person that
that are considered U.S. real property hold-      holding of tax paid by a withholding          sells or exchanges a U.S. real property
ing corporations. Any purchaser (transfer-        agent to a nonresident alien on various       interest must report the gain on a U.S. tax
ee) of a USRPI from a transferor must             items of income, including rental             return, and the buyer of the U.S. real prop-
withhold ten percent (10%) of the amount          income. The person paying rent, as well       erty interest must withhold and pay to the
realized and remit such amount to the IRS         as the real property manager who col-         IRS 10 percent of the gross amount paid to
within 20 days of the date of transfer, using     lects rent on behalf of a foreign owner,      the foreign person. A U.S. real property
Form 8288, and Form 8288-A.                       are considered withholding agents.            interest includes options or contracts to
   The transferee of the property must          • The person making payment of U.S.             acquire land or land improvements and
determine if the transferor is a foreign per-     source rents to a foreign person must         leaseholds of land or land improvements.
son. If the transferor is a foreign person        withhold 30% unless the foreign person        The disposition of such an option or con-
and withholding does not take place in            claims reduced withholding based on a         tract by a foreign seller is reportable on the
accordance with the law, the transferee and       tax treaty (W-8BEN) or makes an irrev-        foreign seller’s U.S. tax return and is sub-
the agent may be held liable for the tax.         ocable election with the IRS to treat the     ject to a 10 percent withholding tax

10                                                                                                                                 WINTER 2007
payable by the buyer to the IRS. Under             rate level) or because the corporation is         3. The disposition is of an interest in a
U.S. tax law, the buyer must determine if          viewed as selling the entire U.S. real prop-         domestic corporation and that corpora-
the seller is a foreign person. If the seller is   erty interest directly to the buyer. In cases        tion furnishes you a certification stating,
a foreign person and the buyer fails to            where the foreign corporation is treated as          under penalties of perjury, that the inter-
withhold, the buyer can be held liable for         making a distribution of the U.S. real prop-         est is not a U.S. real property interest.
the withholding tax.                               erty interest, the foreign corporation is also         Generally, the corporation can make
  The IRS has become aware of instances            subject to a withholding tax of 35 percent             this certification only if the corporation
in which foreign persons have acquired             on the gain in the property, unless it quali-          was not a USRPHC during the previ-
options or entered into contracts to pur-          fies for reduced withholding.                          ous 5 years (or, if shorter, the period
chase U.S. real property interests and sold           Taxpayers may find the following publi-             the interest was held by its present
the options or assigned the contracts before       cation, forms, IRS guidance and regula-                owner), or as of the date of disposition,
such instruments are exercised or executed         tions helpful:                                         the interest in the corporation is not a
and title to the underlying property is            • Publication 515                                      U.S. real property interest by reason of
taken. Buyers of the options or contracts          • Form 8288                                            section 897(c)(1)(B) of the Internal
are failing to withhold and remit to the IRS       • Form 8288-A                                          Revenue Code. The certification must
the required 10 percent from the proceeds                                                                 be dated not more than 30 days before
of the sale.
                                                   • Form 8288-B                                          the date of transfer.
                                                   • Form W-7                                        4. The transferor gives you a certification
Transfer to a Shareholder                          • Form SS-4                                            stating, under penalties of perjury, that
   The IRS is also aware of potentially abu-       • Form 1099-S                                          the transferor is not a foreign person
sive transactions where a foreign corpora-         • Form 1120F                                           and containing the transferor’s name,
tion arranges a sale of its U.S. real property     • Rev. Proc. 2000-35                                   U.S. taxpayer identification number,
interest to a buyer and then transfers its
U.S. real property interest to its foreign
                                                   • IRC Section 1445(a) and (e)                          and home address (or office address, in
individual shareholder. The corporation
                                                   • Treasury Regulation Section                          the case of an entity).
                                                      1.1445-1(b)(3)                                 5. You receive a withholding certificate
often uses a quitclaim deed for the transfer,
                                                                                                          from the Internal Revenue Service
which conveys to the shareholder only the          Exceptions from FIRPTA Withholding
                                                                                                          that excuses withholding. Refer to
corporation’s interest in the property and         You do not have to withhold or file if any of
                                                                                                          Withholding Certificates.
does not warrant good title, but other deed        the following apply.
                                                                                                     6. The transferor gives you written notice
transfers may present similar issues. The          1. You (the transferee) acquire the property
                                                                                                          that no recognition of any gain or loss
foreign shareholder then sells the U.S. real          for use as a home and the amount real-
                                                                                                          on the transfer is required because of a
property interest to the buyer. The foreign           ized (sales price) is not more than
                                                                                                          nonrecognition provision in the
shareholder takes the position that, because          $300,000. You or a member of your fam-
                                                                                                          Internal Revenue Code or a provision
he or she, rather than the corporation, is            ily must have definite plans to reside at
                                                                                                          in a U.S. tax treaty. You must file a
selling the property, some or all of the gain         the property for at least 50% of the num-
                                                                                                          copy of the notice by the 20th day after
inherent in the foreign corporation’s U.S.            ber of days the property is used by any
                                                                                                          the date of transfer with the Internal
real property interest is subject to a maxi-          person during each of the first two 12-
                                                                                                          Revenue Service Center, P.O. Box
mum capital gains rate of 15 percent. That            month periods following the date of
                                                                                                          21086, Drop Point N-423 FIRPTA
is, the foreign shareholder claims that the           transfer. When counting the number of
                                                                                                          Unit, Philadelphia, PA 19114-0586. In
transfer of the U.S. real property interest by        days the property is used, do not count
                                                                                                          2007, you must file a copy of the notice
the foreign corporation to the shareholder            the days the property will be vacant.
                                                                                                          by the 20th day after the date of trans-
does not result in a corporate level tax. If       2. The property disposed of (other than cer-
                                                                                                          fer with the Internal Revenue Service
the foreign corporation had directly sold the         tain dispositions of nonpublicly traded
                                                                                                          Center, P.O. Box 409101, Ogden, UT
U.S. real property interest, it could be sub-         interests) is an interest in a domestic cor-
ject to tax at a rate as high as 35 percent.          poration if any class of stock of the cor-
                                                                                                     7. The amount the transferor realizes on
   The shareholder’s position is incorrect.           poration is regularly traded on an estab-
                                                                                                          the transfer of a U.S. real property
Generally, the foreign corporation (and not           lished securities market. However, if the
                                                                                                          interest is zero.
the foreign individual shareholder) is taxed          class of stock had been held by a foreign
                                                                                                     8. The property is acquired by the United
on all of the gain inherent in the U.S. real          person who beneficially owned more
                                                                                                          States, a U.S. state or possession, a
property interest. The transaction is treated         than 5% of the fair market value of that
                                                                                                          political subdivision thereof, or the
as a taxable sale of the U.S. real property           class at any time during the previous 5-
                                                                                                          District of Columbia.
interest by the corporation, either because           year period, then that interest is a U.S.
                                                                                                     9. The grantor realizes an amount on the
the corporation is making a distribution to           real property interest if the corporation
                                                                                                          grant or lapse of an option to acquire a
the foreign shareholder of the U.S. real              qualifies as a United States Real
                                                                                                          U.S. real property interest. However,
property interest (which would constitute a           Property Holding Corporation (USR-
deemed sale of such interest at the corpo-            PHC), and you must withhold on it.                                 (Continued on back page)

WINTER 2007                                                                                                                                      11
                                                                                                                          Presort Standard
                                                                                                                            U.S. Postage
                                                                                                                          Montgomery, AL
        1201 Carmichael Way
                                                                                                                            Permit 286
     Montgomery, Alabama 36106
            Our Mission
    To protect the public through the
       licensing and regulating of
   Real Estate licensees.(Code 34-27-
      Article 1, General Provisions)

              Bill E. Poole
          Chairman, Huntsville
       Roy F. Bragg, Birmingham
       Jewel Buford, Tuscaloosa
     Gordon Henderson, Albertville
       Robert S. Hewes, Dothan
     Sheila S. Hodges, Gulf Shores
     Chester Mallory, Montgomery
     Janet R. Morris, Montgomery
    Dorothy P. Riggins, Montgomery

  D. Philip Lasater, Executive Director    Tax Rules for Foreign Investors...                 agent must notify you, or the agent will be
                                           Continued from page 11                             held liable for the tax. The agent’s liability
  Pat Anderson, Asst. Executive Director
                                                                                              is limited to the amount of pay the agent
       Vernita Oliver-Lane, Editor             you must withhold on the sale,                 gets from the transaction.
                                               exchange, or exercise of that option.             An agent is any person who represents
      The Alabama Real Estate              10. The disposition (other than certain dis-       the transferor or transferee in any negotia-
                                               positions of nonpublicly traded inter-         tion with another person (or another per-
        Commission UPDATE
                                               ests) is of publicly traded partnerships       son’s agent) relating to the transaction, or in
  is published for the benefit of the
                                               or trusts. However, if an interest in a        settling the transaction. A person is not
    Alabama Real Estate Industry                                                              treated as an agent if the person only per-
                                               publicly traded partnership or trust was
        by the Alabama Real                                                                   forms one or more of the following acts
                                               owned by a foreign person with a
        Estate Commission.                                                                    related to the transaction:
                                               greater than 5% interest at any time dur-
        Phone: 334.242.5544                    ing the previous 5-year period, then that      • Receipt and disbursement of any part of
         Fax: 334.270.9118                     interest is a U.S. real property interest if      the consideration,
       www.arec.alabama.gov                    the partnership or trust would otherwise       • Recording of any document,
                                               qualify as a USRPHC if it were a corpo-        • Typing, copying, and other clerical tasks,
       arec@arec.alabama.gov                   ration, and you must withhold on it.           • Obtaining title Insurance reports and
                                                                                                 reports concerning the condition of the
     Commission Meetings                   Certifications                                        property, or
      Open to the Public                      The certifications in items (3) and (4) are     • Transmitting documents between the par-
All Commission meetings are open to the    not effective if you have actual knowledge,           ties.
    public and that includes real estate   or receive a notice from an agent, that they          A Withholding Agent is personally liable
 licensees. Commissioners welcome and      are false. If you are required by regulations      for the full amount of FIRPTA withholding
  encourage attendance and observation     to furnish a copy of the certification to the      required to be withheld, plus penalties and
      by any licensee in any location.     IRS and you fail to do so in the time and          interest. A Withholding Agent is any person
Locations, dates and times can be found    manner prescribed, the certifications are not      having the control, receipt, custody, dispos-
     on the Commission’s Web site at       effective.                                         al or payment of income that is subject to
          www.arec.alabama.gov                                                                withholding. Generally, the person who
                                           Liability of agents                                pays an amount to the foreign person sub-
    License Renewal Dates                    If you receive either of the certifications      ject to withholding, must do FIRPTA with-
       Real Estate licenses expire
                                           discussed in item (3) or (4) and the transfer-     holding.
   September 30, 2008. Remember to
                                           or’s agent or your agent (the transferee’s
    renew all broker, salesperson and
                                           agent) has actual knowledge that the certifi-        For additional information about Tax
  company licenses in every even year.
                                           cation is false, or in the case of (3), that the   Rules for Foreign Investors, please contact
                                           corporation is a foreign corporation, the          the Internal Revenue Service.            ■

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