HB397 Summary

• Authorizes the Alabama Real Estate Commission to take disciplinary action against licensees for selling or assigning an equitable interest in a residential real estate contract without disclosing to potential buyers that the seller is not the deed holder.

• Requires licensees to disclose in writing to sellers the buyer's intent to assign an equitable interest in the property prior to assignment, with at least three business days' notice before the assignment becomes effective.

• Mandates that contracts establishing equitable interests include a fixed closing date with no automatic extension provisions.

• Adds new definition of "Equitable Interest" as any interest or right a buyer acquires under a residential real estate purchase contract, even if legal title has not transferred, and "Residential Real Estate" as single-family residential property in the state.

• Becomes effective October 1, 2025.