Honorable DaleWanna

Johnson CountyAttorney 1st Floor, Courthouse Cleburne,Texas 76031 OpinionNo. JM-1262

Re: Authority of a county to 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'sfee' to a real estate agent for locating the purchaser of the countyproperty?

Local Government Code section 263.001(a)provides:

The commissionerscourt 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 accordancewith this sectionunless this chapter provides otherwise.1 (Footnoteadded.)

you say inyour request that the Johnson County conmissioners courtvoted to advertisea countyproperty for sale and to advertise that the countywould "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.V8Two 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 inwhich they are couched.

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property for saleby auction though no advertisement was thenmade regarding the finder's fee. Before that auction a real estate agent, aware of the previous advertisement regarding the finder's fee, locateda prospectivebuyer and showedhim the property. That person then bought the property at the auction, at which he was the only bidder. The commissionerscourthas askedyou to request an attorney general opinion on the legality of the county'spaying a finder's fee.

We caution thatwhether the finder's feemay be paid in this instance depends on the resolutionof various~ fact questions. We are unable to make findings of fact in the opinionprocess. We will however respond to what we perceive to be the specific legal issue raised in your guestion: whether the countymay, if all other legal reguirements are met, pay a finder's fee to a real estate agentwho locatesa person to buy countyproperty at an auction held pursuant to section 263.001 of the Local Government Code.

The court inEdwardsv. Lubbock County 33 S.W.Zd 402 (Tex.Civ. App. - Amarillo 1930, no writj addressed a situationwhere the county commissionershad'notwished to go through the auctionprocedures for sale of some county landunder article 1577,V.T.C.S.,now Local Government Code section 263.001, without a guaranteed minimum bid. The plaintiffhad purportedlyagreedwith the county judge, and with the knowledge of the commissionerscourt, that he would be paid a sum of money by the county ifhe could locate such
a bidder. The plaintiff then located such a bidder who contractedwith the county judge to bid the agreed amount at the auction,deposited such sumwith the county treasurer, and in factbid 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 contractwith the plaintiff, which contract, being wyltravires from its inception,"was not thereforevalid. The trial court ruled that the plaintiff should take nothing. Edwar-, at 483.

On appeal, the Edwards court held on the facts presented that no express contracthad 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 courthad, that the commissioners courtwas 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.

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. Honorable Dale Hanna - Page 3 (JM-1262)

We read Edwards as standing for the proposition that a "countymay employ a broker for the sale of its land provided 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, authorized agent,2 or its duly would have had authority to contract to pay the finder's fee in question had all legal requirements been met. In itsbrief 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 inproviding the sale at public auction is to secure to the z;yAyi; fairprice for the property. This

not called upon to pass upon the wisdom or expediency of any contract of employmentwith the commissioners'court, as the making of such contract is,within the exclusivediscretion of such court.
Unless the commissionerscourt had been authorized & &l&.& to make such a contractno recovery inem meruit would have been allowed.

(A) county cannot be held liable in an actionupon 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 aswell asm 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 inEdwards at 484). Section 262.001provides, and before it, article 1580 provided, for a commissionerscourt's appointing an agent wtomake a contract on behalf of the county

. . . for any
. . .purpose authorizedby 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 (FootnoteContiEuedF

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You suggest in the brief accompanyingyour request that itmight be argued that an amendmentto 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, implicitlyprecludes the county from additionallypaying 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'sadditionof details to the auction requirement of the provisiondoes not alter the import of the Edwards case: despite the auction requirement, the county is not precluded frompaying a finder's fee to someone for findinga person to buy the property at the auction, if all other legal requirementsaremet. 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 statutoryparameters, 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 commissionerscourtmay, if all other legal requirementsaremet, pay a finder#s fee to a real estate agentwho finds a buyer for county real property sold at auction.pursuantto 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 promptedyour request. The question of whether the county

(FootnoteContinued) theory. a' brief quote from the Sluder opinion included the portion thereof stating that itwould be unjust to permit the city there "to interposethe defense that it shouldnot be required to pay for [benefits received] because the contract was not made h the narticular form requiredby the city charter." (Emphasisours.) The defect in the contract in Sluder was that ithad been executed by the mayor alone and not provided forby 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
.aswell, was one which itwould have been withinW th: authority of the county to make had applicable legal requirementsbeen 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; addedby the 1953 amendement. Acts 1907,
., - 149, at 1035.

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ever incurredan obligation to pay the fee as a result of the publishing of the advertisementsyou 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 issueswhich could be resolved only upon a full finding of facts. See. e.a., 14 Tex. Jur. 3d -acts S 70 (acceptance of offerwithin reasonabletime), 5 73 (acceptance by performance), S 125 (past consideration);52 Tex. Jur. 3d
m 5 380 (impliedcontracts): and, authorities cited therein.5

SUMMARY

If all other legal requirementsare met, a county commissionerscourt may offer to pay, and pay, a finder's fee to a real estate agent for locatinga buyer to purchase county property sold at an auctionheld pursuant to section 263.001 of the Local Government Code.

NARYKELLER FirstAssistant Attorney General JIM MATTOX Attorney General of Texas

Lou MCCREARY ExecutiveAssistantAttorney General

JUDGE ZOLLIE STEAZLRY SpecialAssistant Attorney General

RENEA HICKS SpecialAssistant Attorney General

RICK GILPIN Chairman,Opinion Committee
Preparedby Jim Moellinger AssistantAttorney 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 inwriting and signedby party to be charged or his authorized signatory).

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