State guide

Buying or Selling a Home in Alabama: What You Need to Know

Alabama is a strong caveat emptor state, which means buyers carry most of the responsibility for finding problems with a home before they buy.

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TL;DR

Alabama is a strong caveat emptor state, which means buyers carry most of the responsibility for finding problems with a home before they buy. Real estate agents follow a state law called BRRETA that controls how they represent you, and they have to give you an agency disclosure form called RECAD at the very first serious conversation. Closing costs are low here thanks to one of the cheapest transfer taxes in the country, but you should still plan for inspections, written buyer-agent contracts, and clear talks about who pays the agent commissions.

10 things every Alabama buyer or seller should know

  • Alabama is one of the strictest caveat emptor states in the U.S., so sellers usually do not have to fill out a property condition disclosure form for a normal resale, and buyers are expected to do their own inspections and research before closing.

  • Even though sellers have limited disclosure duties, a licensed agent in Alabama must disclose any material fact they know that affects the home's value or desirability, under AREC Rule 790-X-3-.12, so always ask your agent direct questions in writing.

  • Since August 17, 2024, every buyer working with an agent who is a MLS participant in Alabama must sign a written buyer representation agreement before that agent shows them a home, as a result of the NAR settlement practice changes.

  • Alabama agents follow a state law called BRRETA (the Alabama Real Estate Consumer's Agency and Disclosure Act) that defines how agents can represent a seller, a buyer, both sides as a dual agent, or neither side as a transaction broker.

  • At the first substantive conversation about real estate, your Alabama agent must hand you a form called RECAD (Real Estate Consumer Agency and Disclosure) that explains the agency choices available to you under Alabama law.

  • Alabama does not require an attorney at residential closings; many transactions are closed by title companies, while attorney closings are common in north Alabama and on commercial deals.

  • Alabama's deed transfer tax is one of the lowest in the country at about $1.00 per $1,000 of the sale price, plus a separate mortgage recording tax of $0.15 per $100 of the loan amount, which keeps closing costs lower than in most states.

  • If the home was built before 1978, federal law requires the seller to give the buyer a lead-based paint disclosure, any known reports about lead, and the EPA pamphlet "Protect Your Family from Lead in Your Home" — Alabama's caveat emptor rule cannot waive this.

  • Earnest money paid by a buyer in Alabama must be deposited into the brokerage's trust account within three business days of receipt under AREC Rule 790-X-4-.01, so ask for a deposit receipt to confirm your funds are protected.

  • Resale condominiums in Alabama created after January 1, 1991 fall under the Alabama Uniform Condominium Act, and the seller must give the buyer a resale certificate with current dues, special assessments, financials, and the governing documents.

The guides

Common questions

Do I have to sign a contract with a buyer's agent before they show me homes in Alabama?
Yes. Since August 17, 2024, any Alabama buyer's agent who is an MLS participant must have a signed written buyer representation agreement in place before showing you a property. The agreement spells out how much the agent will be paid, how long the agreement lasts, and what areas or property types it covers. This is a NAR settlement practice change that applies nationwide, not just in Alabama.
Does the seller still pay the buyer's agent in Alabama after the NAR settlement?
Sometimes, but it is no longer automatic and is not advertised through the MLS the way it used to be. The buyer's agent compensation is now set in the buyer's own written agreement, and the seller can agree in the purchase contract to cover some or all of that amount as a concession or direct payment. In many Alabama markets, sellers still choose to contribute because it widens the pool of buyers who can afford the home.
Does the seller have to fill out a disclosure form about the home's condition in Alabama?
Usually not. Alabama follows a strict caveat emptor (buyer beware) rule, so residential sellers generally are not required by statute to give the buyer a property condition disclosure form for a normal resale. However, sellers cannot actively hide or lie about defects, and the agent involved still has a duty to disclose material facts they personally know about the property.
Do I need a home inspection in Alabama if the seller doesn't have to disclose problems?
A home inspection is strongly recommended for any Alabama buyer because of the state's caveat emptor rule. The standard AAR purchase contract typically includes an inspection contingency, which is a negotiated time window where you can hire inspectors, then either accept the home, ask for repairs or a price reduction, or terminate the contract and get your earnest money back. Without that contingency in writing, you may have no way to walk away if inspections turn up serious issues.
Do I need a lawyer to close on a home in Alabama?
No, Alabama does not require an attorney at residential closings. Title companies handle a lot of closings, especially in coastal areas like Mobile Bay, while attorneys are common in north Alabama and in commercial deals. You can choose to hire your own attorney to review documents, but it is not legally required.
What are closing costs like in Alabama compared to other states?
Alabama has some of the lowest real estate transfer taxes in the country. The state deed tax is $0.50 per $500 of the sale price (about $1 per $1,000), and the mortgage recording tax is $0.15 per $100 of the loan amount. On a $300,000 home with a $240,000 mortgage, that comes out to roughly $300 in deed tax and $360 in mortgage tax, much less than in many other states.
Can the same Alabama agent represent both me and the other side of the deal?
Yes, but only with limits. Alabama allows limited consensual dual agency under BRRETA (Ala. Code §34-27-83), and both the buyer and seller must give written informed consent. In dual agency, the agent's duties to each side are reduced — for example, they cannot share the seller's lowest acceptable price with the buyer or the buyer's top price with the seller.
Is the seller required to disclose lead-based paint on older homes in Alabama?
Yes. Federal law overrides Alabama's caveat emptor rule for lead-based paint. For any home built before 1978, the seller must disclose known lead-based paint and hazards, hand over any reports they have, include a lead-based paint addendum in the purchase contract, and give the buyer the EPA pamphlet "Protect Your Family from Lead in Your Home."
How is my earnest money protected when I'm buying a home in Alabama?
Under AREC Rule 790-X-4-.01, the brokerage holding your earnest money must deposit it in their trust account within three business days of receiving it. The funds are kept separate from the brokerage's own money and can only be released in line with the contract or by agreement of both parties. If there's a dispute, AREC has specific rules about how the broker can disburse or hold the funds.
What disclosures do I need to give for a condo I'm selling in Alabama?
If your condo was created on or after January 1, 1991, it falls under the Alabama Uniform Condominium Act. As the seller, you generally must provide the buyer with a resale certificate that includes the current monthly dues, any known special assessments, the association's financial statements, and the declaration and bylaws. Older condos (created before 1991) are governed by a less detailed framework, but a buyer will still expect to see the basic association documents.

Glossary

3 terms
RECAD — Real Estate Consumer's Agency and Disclosure
The form that lays out, in plain terms, the agency relationship between you and the agent — whether they represent you, the seller, or both.
NAR — National Association of Realtors
The national trade group for real-estate agents. The 2024 NAR settlement is the legal deal that changed how buyer's agents get paid.
MLS — Multiple Listing Service
The shared database agents use to list and find homes for sale. Most homes you'll see online started here.