Code of Civil Procedure (CCP) Section 873.745 – Agents’ Commissions on Sale
Code of Civil Procedure section 873.745 explains how the commissions of both the referee and the buyer’s agent are determined by the court. Importantly, this statute references the Probate Code indirectly. And under the provisions of the Probate Code, an agent is not entitled to a commission on an unconsummated sale. Litigants should keep this in mind where a referee or their agent attempts to recoup a commission despite not being the ones to set the sale in motion.
Code of Civil Procedure section 873.745 states:
The amount of agents' commissions on the sale, if any, shall be fixed by the court and divided or limited in the manner provided for private sales of real property in decedents' estates.What is an Example?
“Shawn” and “Julie” are an unmarried couple who want to start a life together. They find a nice home in Los Angeles and buy it as joint tenants. They move in and start their new life together.
Unfortunately, Shawn and Julie’s relationship doesn’t work out, and they break up. They cannot agree on what to do with the property. Shawn wants to sell all the property and move on with his life, so he sues for partition by sale.
Eventually, the court orders the property sold and the sale proceeds distributed. The court concludes that the property will be sold at a private sale. A referee is assigned, who finds a buyer and negotiates a purchase agreement with the buyer’s agent. The sale is confirmed by the court and the agents’ commissions are included in the court’s orders.Law Revision Commission Comments (CCP § 873.745)
Section 873.745 is new; it codifies the court's general authority to fix and, where necessary, limit and divide agents’ commissions. See Section 873.110 (services of third persons). For statutory provisions as to agents' commissions in private sales of real property in probate, see Probate Code Sections 760, 761, 761.5, and 785.Assembly Committee Comment
Like almost every other partition statute, section 873.745 does not include an “official” Assembly Committee Comment from the California Legislature. But this is primarily due to the Legislature’s overall endorsement and adoption of the Law Revision Commission suggestions when it passed the new partition statutes in 1976.
In fact, the introduction to Assembly Bill 1671 (the bill that contained the new partition laws) states that the Revision Commission’s recommendations “reflect the intent of the Assembly Committee… in approving the various provisions of Assembly Bill 1671.” This signals that the intent of the Legislature was substantially in line with that of the Revision Commission.
Legislative intent aside, the Revision Commission comment here is especially important because it makes an explicit reference to the Probate Code.
Probate Code section 10160 governs a broker's compensation when they sell estate property. Pursuant to Probate Code section 10161, notwithstanding any agreement obtained by the broker, the court exercises its discretion to determine a broker's reasonable compensation. (Estate of Lopez(1992) 8 Cal. App. 4th 317, 321.) A broker who does not have an exclusive listing on the property cannot claim a commission for its sale except for two circumstances:
- Where the agent or broker produces the original bid which is returned to the court for confirmation.
- Where the property is sold on an increased bid, made at the time of the hearing on the petition for confirmation, to a purchaser procured by the agent or broker.” (Prob. Code, § 10161(b).)
So what happens in a partition action where the agent seeks a commission on an unconsummated sale? Do the above provisions apply?
The answer is yes. In fact, the Sixth District Court of Appeal directly interpreted the above comment to section 873.745 as an “explicit endorsement of “allow[ing]” commissions in accordance with probate procedures,” which “directly supports the application of the flat prohibition on such allowance in Probate Code section 10160.” (Sullivan v. Dorsa (2005) 128 Cal.App.4th 947, 958.)
And even though the Revision Commission referenced a now-repealed version of the Probate Code, the Court of Appeal stated, “the Commission's expression of intent to incorporate the statute containing this language is further evidence that it meant to incorporate into partition sales the categorical bar against commissions on unconsummated sales.” (Id.)
As such, unless the agent selected actually assists in selling the property subject to the partition, they are not entitled to a commission. Probate Code section 10160 flatly bars the court from awarding a commission, and that section is incorporated by reference in CCP § 873.745.Contact Us
Here at Underwood Law Firm, our knowledgeable attorneys are here to help navigate the complex web of case law and statutes surrounding partitions. If you are thinking of filing for partition, in the middle of litigating a partition action, or just have any questions, please do not hesitate to reach out to our office.