Property Management Licensing Requirements In Alabama

Updated August 6, 2026

4 min read

Third-party property management in Alabama is regulated activity: before a company can lease units, collect rent, or manage properties on behalf of an owner for compensation, it needs to understand exactly who must hold a license, what that license requires, and how client money has to be handled once the business is operating. This guide covers both, with the statute or agency rule behind each requirement.

Who Needs A License To Manage Property

Alabama treats property management performed for others as a real estate brokerage activity that must run through a licensed qualifying broker. AREC guidance states that when a licensed company manages apartments for owners, it must comply with the license law, including running rent, security deposits, and repair funds through a trust account. The license law includes a limited exemption for on-site managers of apartment buildings or complexes, but AREC has said that exemption does not extend to on-site managers of condominium buildings or complexes.

AREC expects that when a licensed real estate company manages apartments for owners, it must comply with the license law and rules, including depositing security deposits in a trust account and running rent and repair funds through a trust account. (AREC Frequently Asked Questions)
Alabama's license law exempts a person acting as manager of an apartment building or complex from the broker/salesperson licensing requirement, but AREC has stated this exemption does not apply to a person acting as an on-site manager of a condominium building or complex. (Ala. Code § 34-27-2(b)(7))

Client Trust Account Requirements

AREC requires all trust funds handled in property management, including rent and security deposits, to be kept separate from company operating funds, held at an Alabama financial institution, and controlled by the firm's Qualifying Broker. Reconciliation must tie the bank balance to both the trust account's general ledger and each owner's individual ledger at least monthly, and per-owner fund segregation must be maintained so one owner's money is never used to cover another owner's expenses.

Trust funds subject to AREC rules include earnest money on sales, security deposits, and rent money, and trust accounts must be kept separate from company operating accounts to avoid commingling. (AREC Trust Account Maintenance guidance)
All trust accounts must be held at a financial institution with a location in Alabama, and the firm's Qualifying Broker must be a signatory on all trust accounts. (AREC Trust Account Maintenance guidance)
At least once a month, all company money (earned commissions, management fees, and interest earned) must be removed from the trust account; a company may keep up to $1,000 of its own funds, above the bank's minimum balance requirement, in a trust account. (AREC Trust Account Maintenance guidance)
Trust accounts must be reconciled at least monthly, comparing the reconciled bank balance against the trust account's general ledger and the total of all individual client ledgers; if the reconciliation is not performed by the Qualifying Broker, it must be reviewed by the Qualifying Broker. (AREC Trust Account Maintenance guidance)
For rental trust accounts, total liability equals the sum of amounts held for each property owner; a repair for a given owner's property may only be funded up to the balance held for that owner, and an owner's ledger balance should never go negative. (AREC Trust Account Maintenance guidance)
Under AREC's rule on deposit of funds, all funds held in trust under a listing, lease, or property management agreement must be held and deposited by the qualifying broker providing services to the owner, and that broker is responsible to the public and to the Commission for those funds. (Ala. Admin. Code r. 790-X-3-.03 (Deposit of Funds))

Holding a license is the entry requirement; keeping client trust accounts clean is what actually determines whether a Alabama management company stays in business. A trust shortage is a licensing problem, not just a bookkeeping one, so the habits that keep a company compliant are the same ones that keep it audit-ready: deposit on time, never mix operating and client money, and reconcile every account every month. Our guide to preparing for a trust account audit walks through what examiners actually ask for.

Staying Licensed And Compliant

Requirements change over time, education hours get updated, and license periods renew on a fixed schedule, so this is worth a periodic check against the current rule rather than a one-time read. This guide is a starting point for professional managers, not legal advice. For a specific licensing question, confirm the current requirements directly with the Alabama Real Estate Commission (AREC).