In re: Acosta, No. 09-32340DM (Bankr. N.D. Calif., May 24, 2011).
In a recent California bankruptcy court decision, a bankruptcy court addressed the issue of paying for a real estate broker during a bankruptcy case.
In the case, debtor Demmie Acosta asked for the court's permission to employ a real estate agent in order to sell two properties located in San Francisco. To sell the properties, Ms. Acosta sought to have the same broker represent both herself and the buyer. The court granted permission for Ms. Acosta to employ a broker, but specified that he should not represent both of the parties.
The broker did not represent both parties himself, but had another agent from his same firm represent the buyer. After the sale, in order to obtain his commission, the broker sought the court's approval. The broker submitted to the court an affidavit specifying that he believed that the court's instruction was only meant to prevent him personally from representing both parties, not his entire firm.
The court was not entirely convinced by the broker's argument that he did not understand the court's instruction. After all, the contracts that exchanged hands used the firm's name as representative of both parties, not the individual agents at hand. Thus, the court reasoned that it was unreasonable for the agent not to be aware of the conflict.
In this specific circumstance, the debtor claimed she had enough assets to pay all her creditors in full, including the broker. If this was true, it would be fine to approve the commission of the broker, despite his error, because it would not adversely affect other creditors. However, if that turned out not to be true, the commission would be paid before other creditors are paid, and leave a valid creditor with less than what is owed to him. For this reason, the court grants its approval of half of the requested commission, with the rest to be paid after all other creditors.
