In Alabama, inactive real estate agents can’t practice or earn commissions but can refer clients if their license is active and covered by E&O. You can remain inactive for up to 12 months without penalty, longer with CE credits. Learn how to protect your license and monetize smarter.
At some point, many real estate agents in Alabama decide to step back, whether temporarily or long term. Life changes. Priorities shift. But here’s the truth: just because you’re not actively closing deals doesn’t mean your license has to sit idle, or worse, lapse entirely.
In this guide, we’ll walk you through what it actually means to have an inactive license in Alabama, how to stay compliant with the Alabama Real Estate Commission, and how to continue earning without selling. You’ll also learn how Errors and Omissions (E&O) insurance plays a central role, especially if you want to protect your license and still make money through referrals.
We’ll help you navigate the rules, avoid costly missteps, and make smart moves that protect both your income and your future options.
What Happens When Your Alabama License Goes Inactive
Once your real estate license is marked inactive by the Alabama Real Estate Commission, you’re no longer authorized to conduct real estate transactions. That means no showings, no contracts, and no commissions from sales or leases. It’s a hard line, there’s no gray area.
However, if you keep your license active with a brokerage like Realty Hub, you can still legally refer clients to other agents and earn referral fees. That’s not just a workaround, it’s a smart strategy, especially if you’re not actively working but still want to monetize your license.
Can you make money while inactive?
Yes, if your license is technically active, meaning it’s held under a brokerage, you’re in good standing with the Commission, and you’re covered by E&O.
How Long Can Your Alabama Real Estate License Stay Inactive?
Alabama allows you to remain inactive for up to one year without needing to complete continuing education. During this window, your license is still under the Commission’s control, it just isn’t tied to a brokerage, and you’re barred from practicing.
If you go beyond 12 months, reactivation gets more complex. The state requires up to 30 hours of continuing education, depending on how long you’ve been inactive.
These CE hours must be approved by the Commission, and they have to be completed before you can submit for reactivation.
Let your license lapse for more than two years, and you risk starting over. That could mean retaking pre-license education and passing the state exam again. Not worth it, especially when reactivating with a low-cost brokerage can keep you compliant and earning.
Common Mistakes That Can Cost You Your License
It’s easy to assume that a “paused” career means fewer risks. But inactive agents still face compliance traps that can jeopardize their license.
One of the most serious? Letting your E&O insurance lapse. In Alabama, you’re required to maintain active E&O if your license is affiliated with a brokerage, even if you’re not doing transactions. Skip this, and you could be fined or suspended.
Another mistake: ignoring continuing education. Many agents forget that CE requirements apply once they reenter the field, and the longer you wait, the more hours you’ll need to complete.
Perhaps the biggest misstep is misunderstanding your license status. A referral agent is still active under a brokerage. An inactive license means you’re not allowed to do anything, not even referrals.
Step-by-Step: How to Reactivate Your Alabama License
Reactivating your Alabama real estate license doesn’t have to be complicated, but it does require precision. Here’s how to do it the right way, without wasting time or risking compliance.
1. Ensure E&O Insurance Is Current
Before the state will approve your reactivation, you must show proof of active Errors and Omissions insurance. At Realty Hub, we provide this as part of our flat-fee brokerage model. For $100 per year, our agents are covered, whether they’re closing deals or strictly working referrals.
We also make the coverage practical. There are no monthly premiums or surprise surcharges. If a claim is filed, you pay only the deductible. We pay the premium. It’s straightforward protection that keeps your license compliant with Alabama law, without inflating your overhead.
2. Complete Required Continuing Education
Even if you haven’t been active, continuing education still follows you. Alabama requires:
- 7 hours of CE per inactive year, up to a maximum of 30 hours.
- All CE must be approved by the Alabama Real Estate Commission.
That means if you’ve been inactive for over a year, you’re likely required to complete a full CE cycle before you can apply to reactivate your license.
3. Submit the Activation Form to AREC
Once your E&O and CE are squared away, submit the License Status Change form to the Alabama Real Estate Commission. This form updates your license from inactive to active and requires you to list your new brokerage affiliation.
Pro Tips: Making the Most of an Inactive Period in Alabama
Going inactive doesn’t mean going stagnant. If you’re strategic, this period can become a high-leverage opportunity to simplify your business and set yourself up for long-term sustainability.
- Affiliate with a virtual, flat-fee brokerage like Realty Hub. We keep your license active, maintain your E&O coverage, and allow you to continue earning through referrals.
- Use your license, even passively. Referring clients can be a reliable income stream without the demands of full-time agency life.
- Retain access to critical tools. With Realty Hub, you get forms, document compliance support, and direct broker access without having to join the MLS or a local board.
- Cut unnecessary expenses. No franchise fees. No association dues. Just the essentials, backed by a model designed to maximize flexibility and minimize cost.
For many of our agents, an inactive period has become a turning point. It’s when they realized they didn’t need to choose between freedom and compliance, they could have both.
FAQs from Alabama Agents
Real estate licensing rules in Alabama can feel confusing, especially when you’re not actively working deals. Here are the most frequent questions we hear from agents looking to simplify, reduce costs, and still stay in the game.
“Can I use Realty Hub just for referrals?”
Answer: Yes. Many of our agents hold an active license solely to earn referral fees. You don’t need to list homes or show properties to stay profitable. We provide E&O coverage, forms, broker support, and a structure designed for referral-only business.
“Is E&O required if I’m not doing deals?”
Answer: Yes. The Alabama Real Estate Commission requires all licensees affiliated with a brokerage to maintain active E&O insurance, whether you’re closing transactions or simply referring.
“What if I go inactive for over one year?”
Answer: You’ll need to complete continuing education before reactivating. Alabama requires up to 30 hours of CE depending on how long you’ve been inactive. Go past the two-year mark, and you risk license expiration, which may require starting over.
“What if I’m sued after going inactive?”
Answer: You’re only protected if your E&O policy includes tail or retroactive coverage. With Realty Hub, our group policy offers retroactive coverage as long as your license has remained active with us and there was no lapse in coverage. If you leave the brokerage or your license fully expires, that protection ends.
Ready to Keep Your License Active (Without All the Hassle)?
If you’ve read this far, you’re likely not done with real estate, you’re just done with unnecessary costs, pressure, or being forced into a traditional model that doesn’t fit your lifestyle. Maybe you’re exploring what you can do with your license in Alabama without going full throttle. That’s exactly where Realty Hub comes in.
Here’s How We Help Agents Like You
- Stay Active Without Going Full-Time: With Realty Hub, your license stays active through our brokerage. Whether you close deals or just make referrals, you remain compliant and protected.
- Flat-Fee E&O Coverage, Bundled: We include Errors and Omissions insurance as part of our $100/year membership. You won’t have to hunt down your own policy or worry about hidden coverage gaps.
- Referral-Only Setup, No MLS or Association Required: Earn income through referrals while avoiding the cost of MLS access or REALTOR® dues. If you’re not using them, don’t pay for them.
You stay licensed. You stay protected. And you stay in control.
Whether you’re earning passive income through referrals, slowly easing back into the industry, or simply keeping the door open for future opportunities, Realty Hub makes sure your license works for you, not the other way around.
No stress. No bloat. Just a better way to stay in the business. Join Realty Hub now and put your license to work, on your terms.