Every real estate transaction ends with a commission being paid. The document that governs how that commission is divided and distributed is the Commission Disbursement Authorization, commonly referred to as the CDA.
For agents new to the industry, or those who have signed dozens without fully reading them, understanding what a CDA actually says is more consequential than it might appear.
Key Takeaways
- A CDA is a legal document that instructs the title company or closing agent on how to distribute the commission from a closed transaction.
- The CDA itemizes every party receiving a portion of the commission and the exact amount each party receives.
- When a commission advance is in place, the advance company appears on the CDA as a payee, directing a portion of the commission to them at closing.
- Errors on a CDA can delay or misdirect commission payments.
What Is a Commission Disbursement Authorization?
A Commission Disbursement Authorization is a document the broker issues to the title company specifying exactly who receives what portion of the commission when a sale closes.
In most transactions, the commission is paid from the seller’s proceeds at closing. The title company holds those funds and distributes them only as authorized. The CDA is what authorizes that distribution.
Without a CDA on file, the title company will not release commission funds. It is a required document in most real estate transactions.
Who Issues the CDA
The CDA is issued by the licensed broker, not the individual agent. This reflects the legal ownership of the commission. In most states, commissions are earned by and belong to the broker, who then disburses the agent’s portion according to their compensation agreement.
The agent may receive a copy for review, but the broker is the authorizing party. Title companies accept the CDA on that basis.
What a CDA Typically Contains
While formats vary by brokerage and state, a standard CDA includes the following:
Transaction details:
- Property address
- Closing date
- Purchase price
- Total commission amount and the percentage or flat fee it represents
Payee breakdown:
A line-by-line list of every party receiving a portion of the commission, with the exact dollar amount allocated to each. This typically includes:
- The listing brokerage
- The buyer’s brokerage
- Individual agent splits within each brokerage
- Any referral fees owed to referring agents or companies
- Any advance company repayment, if a commission advance was issued on the transaction
Authorization signature:
The broker’s signature authorizing the disbursement as itemized.
How to Read the Payee Breakdown
The payee breakdown is the most important section of the CDA for an individual agent. It shows exactly what the agent will receive at closing after all splits, fees, and deductions are applied.
Reading it correctly requires understanding the order of distribution:
- Gross commission: the total commission agreed upon in the listing or buyer representation agreement
- Brokerage split: the portion retained by the broker per the agent’s compensation agreement
- Referral fees: deducted before the agent’s net commission if a referral agreement is in place
- Advance company repayment: if a commission advance was taken, the authorized amount is directed to the advance company before the agent’s net is calculated
- Agent net commission: what remains after all of the above is the amount disbursed to the agent
Each line should match what the agent expects based on their brokerage agreement, any referral arrangements, and any advance agreements signed prior to closing.
Where a Commission Advance Appears on the CDA
When an agent has taken a commission advance on a transaction, the advance company appears as a named payee on the CDA. The amount directed to the advance company is the portion of the commission that was purchased, not a separate payment drawn from the agent’s personal funds.
This is the mechanism that makes commission advance repayment automatic. The broker authorizes the disbursement at the time the advance is issued, and that authorization is reflected on the CDA at closing. The agent receives the remainder after the advance company’s portion is directed accordingly.
Agents who have taken an advance should confirm that the advance company’s name and repayment amount appear correctly on the CDA before closing. An error at this stage, like a wrong amount or a missing payee, can delay disbursement and require a correction before funds are released.
Common Errors to Check For
CDAs are prepared by the brokerage or its administrative team and can contain errors, particularly on transactions with multiple parties or non-standard commission arrangements.
Before closing, agents should verify:
- The gross commission matches the agreement: the percentage or flat fee should align with the listing or buyer representation agreement
- The split is correct: the brokerage’s retained portion should match the agent’s compensation agreement
- Referral fees are accurately reflected: if a referral was agreed upon, the amount and payee should be correctly listed
- The advance company amount is correct: if an advance was issued, the repayment amount on the CDA should match the advance agreement
- The agent’s net is what remains: after all deductions, the agent’s line should reflect the correct final amount
Discrepancies should be flagged to the broker before closing day, not after.
Common Questions
Does the agent sign the CDA?
In most cases, the CDA is signed by the broker. Some brokerages also require the agent’s signature as acknowledgement. Agents should confirm their brokerage’s process.
When is the CDA submitted to the title company?
CDAs are typically submitted by the broker in advance of closing, often several days before, so the title company can prepare the settlement statement accordingly.
What if the CDA contains an error discovered after closing?
Corrections after closing are more complicated and may require amended disbursements or separate transfers between parties. Reviewing the CDA before closing is always preferable.
Can an agent request a copy of the CDA?
Yes. Agents are entitled to review the CDA for their own transaction. Any broker who declines to share it with the agent should be a point of concern.
If a commission advance is in place, does the advance company receive their funds before or after the agent?
The disbursement happens simultaneously, the title company distributes all funds at once per the CDA instructions. No party waits for another’s portion to clear first.
The Bottom Line
A Commission Disbursement Authorization is not a formality. It is the document that determines exactly how a commission is divided and who receives what at closing. For agents with commission advances in place, referral arrangements, or non-standard splits, the CDA is particularly worth reviewing carefully before closing day.
Errors are correctable, but they are far easier to correct before the transaction closes than after.
Concord Advance provides commission advances to real estate agents and brokers nationwide. When an advance is in place, repayment is handled automatically through the CDA at closing, no action required from the agent. Applications are completed online at concordadvance.com.
