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Real Estate Commission Instructions

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REAL ESTATE COMMISSION INSTRUCTIONS

Property Identification

Property Address:

Parcel / APN Number:

Parties

Commission Instructions

Total Commission to be paid on sale: or Percentage of Purchase Price:

Cooperating Broker Share (percentage): Flat amount to cooperating broker (if applicable):

Referral fee payable to third party (amount or percent):

Timing and Method of Payment

Commission shall be disbursed from escrow or closing funds as follows (select applicable):

Payable at closing when escrow disburses proceeds

Payable upon funding of buyer's loan or receipt of purchase funds

Partial payment prior to closing (describe below)

Escrow / Title Agent Instructions

Escrow/Title Company:

Escrow Officer / Contact:

Escrow Instruction: The escrow agent is authorized and instructed to disburse commission and any cooperating broker, referral or marketing fees at closing to the payee(s) identified above in accordance with these instructions and any applicable purchase contract. If written dispute as to entitlement to commission is presented to escrow, escrow may hold funds pending a written release signed by all disputing parties or direction from a court of competent jurisdiction.

Authorization, Representations and Certifications

Principal hereby authorizes Listing Broker to provide these commission and disbursement instructions to escrow/title, to prepare payee information and to receive commission proceeds on behalf of brokerage, and to execute such documents as necessary to effect the distribution described herein. Principal represents that they have authority to direct disbursement of commission under the listing agreement or other applicable contract and that no other unrevoked written instruction inconsistent with these directions exists.

Listing Broker represents that it is a duly licensed real estate broker and that any cooperating or referral agents identified in connection with the transaction are properly licensed. Listing Broker shall be responsible for disbursing cooperating broker and referral fees to agents or third parties as required and for satisfying any applicable tax reporting obligations.

Dispute Resolution, Indemnity and Miscellaneous

If a dispute arises regarding entitlement to commission, the parties agree that escrow may retain disputed amounts pending resolution. The party or party asserting entitlement must pursue resolution by arbitration or court action as provided in the listing or purchase agreement. The party that prevails shall be entitled to recover costs and reasonable attorneys' fees incurred in enforcing these instructions.

Each party shall indemnify, defend and hold harmless escrow/title agent and the other parties from claims, liabilities or expenses (including attorneys' fees) arising from inaccurate payee information or incorrect wiring instructions provided by such party.

Entire Agreement: These Commission Instructions constitute the entire agreement between the parties with respect to the subject matter hereof and supersede any prior written instructions regarding commission disbursement for this transaction. Governing Law: This document shall be governed by and construed in accordance with the laws of the state in which the property is located.

Effective Date and Closing Date

Effective Date of these instructions:

Anticipated Closing Date:

Disclosures

Broker Disclosed Dual Agency:

Any existing lien, encumbrance or third-party claim that may affect disbursement has been disclosed to escrow:

Additional Instructions / Notes

Seller:

By:

Date:

Listing Broker:

By:

Date:

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What the Real Estate Commission Instructions Are

The Real Estate Commission Instructions document records how a commission or commission split will be paid at closing and who is authorized to receive funds. It typically lists the transaction, property, parties, brokerages, commission percentages or flat amounts, and any conditions tied to payment. The form accompanies closing statements or escrow instructions and creates a clear, attributable instruction for escrow or title agents to disburse funds. When signed by the appropriate parties it becomes an enforceable record; electronic execution is generally acceptable under ESIGN and UETA where those laws apply.

Why Clear Commission Instructions Matter

Clear instructions reduce disputes, speed disbursement, and create an auditable record for tax and compliance purposes. Properly completed forms protect brokers, agents, buyers, sellers, and closing agents by documenting who should be paid and under which terms.

Why Clear Commission Instructions Matter

Who Typically Prepares and Receives These Instructions

The document is prepared by listing brokers, selling brokers, or their designated staff and provided to escrow or title for payment processing.

  • Listing brokers and brokerages — prepare split details and authorize broker-level disbursement instructions.
  • Selling agents and buyer brokers — confirm amounts, sign when required, and verify payee details.
  • Escrow and title officers — receive instructions, verify signatures, and execute disbursements at closing.

Accurate routing and signatures ensure funds are released to the correct payees without delaying closing or triggering corrective accounting.

Core Elements of Professional Commission Instructions

A complete set of instructions is concise, consistent with the purchase contract and closing statement, and includes verifiable payee details and signatures to support disbursement and tax reporting.

Transaction ID

Reference the purchase agreement, escrow number, or closing file so the instruction ties directly to recorded closing documents and settlement statements.

Payee Details

Provide full legal name, brokerage name, tax classification, mailing and business address, and remit instructions to ensure correct payment routing.

Commission Split

State percentages or fixed amounts for each recipient, including any contingency conditions that affect entitlement to payment.

Authorization

Include an explicit statement authorizing escrow/title to disburse funds as listed, signed by the party with authority under the brokerage agreement.

Tax Information

Note whether payees are individuals or entities and whether a current W-9 has been provided to avoid backup withholding problems.

Signatures & Dates

Signed and dated signature block for authorized broker or agent, and notarization or witness details if state law or closing practice requires them.

Required Data Fields to Include

Payee name: Full legal name
Brokerage name: Registered business name
Tax classification: Individual or business
Remit address: Street, city, state, ZIP
Commission amount: Percentage or flat amount
Authorized signer: Name and title

Step-by-Step: Completing the Commission Instructions

Follow these steps to prepare, confirm, and deliver commission instructions so escrow can disburse funds at closing without delays.

  • 01
    Prepare form: Enter transaction ID, payees, and commission splits.
  • 02
    Attach tax info: Confirm W-9s or entity documents are on file.
  • 03
    Obtain authorization: Have the authorized broker sign and date the form.
  • 04
    Deliver to escrow: Send instructions to title/escrow with closing package.

How to Customize and Submit the Form Online

Configure your digital workflow so commission instructions route automatically to escrow, accounting, and broker records.

Field Configuration
Required fields Make payee, amount, and signature mandatory
Conditional fields Show remittance only for non-standard payees
Signer order Require broker signature before escrow
Notifications Email copies to accounting and escrow

Where to Send Completed Commission Instructions

Deliver completed instructions to the parties responsible for disbursement and recordkeeping to ensure proper handling at closing.

  • Escrow/Title: Primary recipient for payment disbursement at closing.
  • Broker Accounting: Retain a copy for commission processing and bookkeeping.
  • Listing Brokerage: Maintain company files and agent split records.
  • Tax Records: Store with year-end documents for 1099 reporting.

Digital Signing, Integrations, and Format Support

Use a secure eSignature workflow and formats compatible with your escrow and accounting systems.

  • File formats: PDF and DOCX supported
  • Integrations: Salesforce, NetSuite, Google Workspace
  • Authentication: Email, SMS code, or stronger MFA

Ensure the chosen platform provides audit trails, exportable signed PDFs, and connectors to title or accounting software for seamless processing.

Timing and Deadlines to Watch

Key timing items affect disbursement and tax reporting; follow these deadlines to avoid late filings or withheld payments.

Before closing:

Submit instructions to escrow prior to final closing to enable timely payment.

W-9 on file:

Provide payee W-9 upon first payment request to prevent backup withholding.

1099 reporting:

Issue applicable 1099s to recipients and the IRS by Jan 31 each year.

Record retention:

Keep payment records for at least three years per IRS guidance.

RON timing:

If using remote notarization, allow time for identity proofing and recording requirements.

Common Preparation Errors to Avoid

  • Incomplete payee details leading to returned or misdirected disbursements and manual reconciliation delays.
  • Missing or outdated W-9s that trigger backup withholding or tax-reporting corrections after the calendar year ends.
  • Unclear commission formulas or conditions that create disputes between agents and require post-closing adjustments.
  • Sending unsigned instructions or relying on ambiguous authorization creates delays and may prevent escrow from releasing funds.

Consequences of Incorrect or Late Instructions

Tax reporting: 1099 penalties up to $330 per form
Backup withholding: 24% withholding if TIN is missing
Payment delays: Escrow may withhold disbursement
Breach claims: Agent disputes over splits
Notary issues: Invalid acknowledgements without proper notarization
Record retention: Loss of evidence if records discarded early

Real-world Examples of Digital Commission Instructions

Case examples show how digitized instructions reduce friction and preserve compliance across closing workflows.

Martin Properties

A mid-size brokerage moved instructions online to avoid clerical errors and lost forms.

  • They reduced manual follow-ups per closing.
  • As a result they processed more closings without additional staff and maintained complete audit trails for every disbursement and 1099 cycle.

Optica Ventures LLC

An investment-focused firm standardized commission directives across agents to improve accounting.

  • Standardization simplified reconciliation.
  • The firm reported fewer payment disputes, faster month-end closes, and a clear record linking each disbursement to the signed instruction and escrow settlement statement.

Comparing eSignature Vendors for Commission Instructions

Basic pricing and key capability differences among common eSignature providers. signNow is listed first per vendor comparison standards.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial, no credit card required Varies Varies Varies Varies
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No cap 100 envelopes/user/year Varies Varies Varies

Frequently Asked Questions and Troubleshooting

Answers to common questions about signing, delivery, legal effect, and recordkeeping for commission instructions.


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