Honorable Dale Wanna Opinion No. JM-1262
Johnson County Attorney
1st Floor, Courthouse Re: Authority of a county to
Cleburne, Texas 76031 pay a "finder's fee" to a real
estate aaent for locatina a
purchase; for county prope;ty
(RQ-1994)
Dear Mr. Iianna:
You ask:
If a County publishes notice and sells county
owned real property at auction as set forth
in Section 263.001, Local Government Code,
can the County pay a *finder's fee' to a real
estate agent for locating the purchaser of
the county property?
Local Government Code section 263.001(a) provides:
The commissioners court of a county, by an
order entered in its minutes, may appoint a
commissioner to sell or lease real prope*y
owned by the county. The sale or lease must
be made at a public auction held in accor-
dance with this section unless this chapter
provides otherwise.1 (Footnote added.)
you say in your request that the Johnson County conmis-
sioners court voted to advertise a county property for sale
and to advertise that the county would "pay a 3% finder's
fee to the real estate agent responsible for locating the
actual buyer." You say that the property did not, however,
"sell as a result of the advertisements.V8 Two years later
the commissioners court again voted to advertise the
1. Jack, 694 S.W.?d 391 (Tex. App. - San
Antonio 1985, writ ref'd n.r.e.), noted that the provisions
now in section 263.001(a) are mandatory despite the
permissive terms in which they are couched.
p. 6743
Honorable Dale Hanna - Page 2 (JM-1262)
property for sale by auction though no advertisement was
then made regarding the finder's fee. Before that auction a
real estate agent, aware of the previous advertisement
regarding the finder's fee, located a prospective buyer and
showed him the property. That person then bought the
property at the auction, at which he was the only bidder.
The commissioners court has asked you to request an attorney
general opinion on the legality of the county's paying a
finder's fee.
We caution that whether the finder's fee may be paid in
this instance depends on the resolution of various~ fact
questions. We are unable to make findings of fact in the
opinion process. We will however respond to what we per-
ceive to be the specific legal issue raised in your gues-
tion: whether the county may, if all other legal reguire-
ments are met, pay a finder's fee to a real estate agent who
locates a person to buy county property at an auction held
pursuant to section 263.001 of the Local Government Code.
The court in Edwards v. Lubbock County 33 S.W.Zd 402
(Tex. Civ. App. - Amarillo 1930, no writj addressed a
situation where the county commissioners had'not wished to
go through the auction procedures for sale of some county
land under article 1577, V.T.C.S., now Local Government Code
section 263.001, without a guaranteed minimum bid. The
plaintiff had purportedly agreed with the county judge, and
with the knowledge of the commissioners court, that he would
be paid a sum of money by the county if he could locate such
a bidder. The plaintiff then located such a bidder who
contracted with the county judge to bid the agreed amount at
the auction, deposited such sum with the county treasurer,
and in fact bid that amount at the auction. The land was
sold at the auction, but to another, higher bidder.
The trial court concluded that the commissioners court
had no authority to enter into the alleged contract with the
plaintiff, which contract, being wyltra vires from its
inception," was not therefore valid. The trial court ruled
that the plaintiff should take nothing. Edwar-, at 483.
On appeal, the Edwards court held on the facts pre-
sented that no express contract had been made for payment of
the plaintiff for his services and that the plaintiff was
not therefore entitled to recover on the express contract
alleged, & at 484. mwardg did not hold, however, as the
trial court had, that the commissioners court was without
authority to enter into such a contract. Moreover, edwards
reversed the trial court's ruling that the plaintiff take
nothing, and held that he was entitled to recover on a
-turn me& theory, & at 484.
p. 6744
I’ Honorable Dale Hanna - Page 3 (JM-1262)
.
We read Edwards as standing for the proposition that a
"county may employ a broker for the sale of its land provid-
ed the requirements of a public auction are met." &S 35
D. Brooks, County and Special District Law 5 9.24 (Texas
Practice 1989).
We think it implicit in the a court's treatment
of the case that the commissioners court, or its duly
authorized agent,2 would have had authority to contract to
pay the finder's fee in question had all legal requirements
been met. In its brief opinion, the court quoted article
1577, V.T.C.S. -- codified in 1987 as Local Government Code
263.001, the provision you ask about -- and noted, at 404:
The object of the statute in providing the
sale at public auction is to secure to the
z;yAyi; fair price for the property. This
not called upon to pass upon the
wisdom or expediency of any contract of
employment with the commissioners' court, as
the making of such contract is, within the
exclusive discretion of such court.
Unless the commissioners court had been authorized &
&l&.& to make such a contract no recovery in em meruit
would have been allowed.
(A) county cannot be held liable in an
action upon an implied contract or auantum
meruit, unless the commissioners* court was
authorized to make the contract sought to be
implied, or on which the -turn menrif; is
based.
Baldwin v. Tra is County 88 S.W. 480, 404 (Tex. Civ. App. -
1905, writ ref:d); see aiso 52 Tex. Jur. 3d mcinalities
5 380, citing Edwards as well as m for this rule; and
discussion at 84 A.L.R. 946.3
2. m Local Gov't Code 5 262.001 (the predecessor
statute, article 1580, V.T.C.S., was quoted in Edwards at
484). Section 262.001 provides, and before it, article 1580
provided, for a commissioners court's appointing an agent
wto make a contract on behalf of the county . . . for
any . . . purpose authorized by law."
3. Edwar& cited Sluder v. Citv of San AntOniQ 2
S.W.Zd 841 (Comm. App. 1928) as authority for its ruling
that the plaintiff should recover on a guantum m rui
(Footnote ContiEuedF
p. ~6745
.
Honorable Dale Hanna - Page 4 (JM-1262) ,
You suggest in the brief accompanying your request that
it might be argued that an amendment to article 1577 in
1953, subsequent to the m court*6 consideration of
those provisions, by specifically providing for the method
of giving notice of sale at auction of county real estate,
implicitly precludes the county from additionally paying a
finder's fee to a real estate agent for finding a purchaser.
m Acts 1953, 53rd Leg., ch. 133, at 447.4
The 1953 amendment's addition of details to the auction
requirement of the provision does not alter the import of
the Edwards case: despite the auction requirement, the
county is not precluded from paying a finder's fee to
someone for finding a person to buy the property at the
auction, if all other legal requirements are met. Where a
power, here the power to sell property at auction, is
conferred on the commissioners court, the commissioners
court has broad discretion, within constitutional and
statutory parameters, in its exercise of the power so
conferred. w -es v. Laush;un, 214 S.W.Zd 451 (Tex.
1948).
We conclude, therefore, that a commissioners court may,
if all other legal requirements are met, pay a finder#s fee
to a real estate agent who finds a buyer for county real
property sold at auction.pursuant to section 263.001, Local
Government Code. We caution again that we do not here
either approve or disapprove payment of the particular
finder's fee, the issue of the payment of which you say
prompted your request. The question of whether the county
(Footnote Continued)
theory. a' brief quote from the Sluder opinion
included the portion thereof stating that it would be unjust
to permit the city there "to interpose the defense that it
should not be required to pay for [benefits received]
because the contract was not made h the narticular form
required by the city charter." (Emphasis ours.) The defect
in the contract in Sluder was that it had been executed by
the mayor alone and not provided for by ordinance of the
city council as the city charter required. &2 SLU&z at
841. By implication, the finder#s fee contract in Ed ard
.as well, was one which it would have been withinW th:
authority of the county to make had applicable legal
requirements been met.
4. Article 1577 was codified, without substantive
change, in 1987 as Local Government Code section 263.001.
The section includes, as subsection' (b), ;;I, prrisiz;
added by the 1953 amendement. Acts 1907, ., -
149, at 1035.
p. 6746
Honorable Dale Hanna - Page 5 (JM-1262)
ever incurred an obligation to pay the fee as a result of
the publishing of the advertisements you refer to and the
real estate agent's locating, some two years later, a buyer
to purchase the property at an auction, raises various legal
issues which could be resolved only upon a full finding of
facts. See. e.a., 14 Tex. Jur. 3d -acts S 70 (accep-
tance of offer within reasonable time), 5 73 (acceptance by
performance), S 125 (past consideration); 52 Tex. Jur. 3d
m 5 380 (implied contracts): and, authorities
cited therein.5
SUMMARY
If all other legal requirements are met, a
county commissioners court may offer to pay,
and pay, a finder's fee to a real estate
agent for locating a buyer to purchase county
property sold at an auction held pursuant to
section 263.001 of the Local Government Code.
JIM MATTOX
Attorney General of Texas
NARYKELLER
First Assistant Attorney General
Lou MCCREARY
Executive Assistant Attorney General
JUDGE ZOLLIE STEAZLRY
Special Assistant Attorney General
RENEA HICKS
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Jim Moellinger
Assistant Attorney General
5. See alsg f 20(b) of the Real Estate License Act,
V.T.C.S. art. 6573a (agreement on which action for
commission on sale or purchase of real estate is brought
must be in writing and signed by party to be charged or his
authorized signatory).
p. 6747
Untitled Texas Attorney General Opinion
Combined Opinion