If you’ve spent any time in real estate Facebook groups, agent forums, or even reviewing closing statements, you’ve probably heard the terms CDA, DA, Commission Disbursement Authorization, or Disbursement Authorization.
They’re all referring to essentially the same thing: a document that instructs the title company how to distribute money at closing. A CDA is commonly used by brokerages to simplify accounting, get agents paid faster, and reduce administrative delays.
At Easy Realty, we strongly prefer using DAs whenever possible because they help us pay agents quickly and efficiently. However, many agents misunderstand what a DA actually is and, more importantly, how commissions legally work in a real estate transaction.
Let’s clear that up.
First Things First: The Brokerage Owns the Transaction
This is one of the most important concepts for every real estate agent to understand.
When an agent takes a listing, that listing belongs to the brokerage.
When an agent represents a buyer under contract, that client relationship belongs to the brokerage.
The agent is licensed under the brokerage and performs services on behalf of the brokerage. The brokerage is the principal business entity involved in the transaction.
In practice:
- The listing agreement is between the seller and the brokerage.
- The buyer representation agreement is between the buyer and the brokerage.
- The commission agreement is between the parties and the brokerage.
- The agent performs services under their license and independent contractor agreement with the brokerage.
Agents create tremendous value by generating opportunities, serving clients, negotiating contracts, and facilitating successful closings. But legally speaking, the real estate business is conducted through the brokerage.
Who Actually Receives the Commission?
Another common misconception is that agents receive commissions directly from real estate transactions.
They do not.
The commission earned in a transaction belongs to the brokerage.
The commission is disclosed as part of the closing process and appears on the settlement documentation prepared by the closing company. Those documents may be a HUD settlement statement or an ALTA settlement statement, depending on the transaction and jurisdiction.
The title company or settlement company disburses funds based on those closing instructions and disclosures.
In other words:
The brokerage receives the commission.
The agent then receives compensation from the brokerage according to the terms of their independent contractor agreement.
This is a very important distinction. Agents are generally not being paid a commission directly from a buyer or seller. Rather, they are being compensated by the brokerage based on the revenue they helped generate for the brokerage.
So What Exactly Is a CDA?
A Commission Disbursement Authorization (CDA) is simply an instruction from the brokerage to the title company explaining how the brokerage would like funds distributed.
Think of it as a payment authorization.
Instead of the title company sending the entire brokerage commission to Easy Realty and then requiring our accounting department to issue multiple checks afterward, we can authorize the title company to pay certain amounts directly on our behalf.
For example, we may ask the title company to:
- Pay an agent’s compensation.
- Pay a referral fee.
- Pay a transaction coordinator.
- Pay a home inspector.
- Pay an appraiser.
- Pay a photographer.
- Pay a marketing vendor.
- Pay virtually any legitimate business expense associated with the transaction.
After those authorized disbursements are made, the title company sends the remaining balance to the brokerage.
The result is simpler accounting, fewer checks, less processing time, and much faster payment distribution.
Why Easy Realty Prefers DAs
At Easy Realty, our compensation model is simple.
Agents receive 100% commission after the brokerage’s $495 fee is deducted, consistent with the terms of their independent contractor agreement.
Using DAs allows us to:
- Get agents paid faster.
- Reduce accounting delays.
- Eliminate unnecessary check cutting.
- Create a clear paper trail.
- Provide transparent commission breakdowns.
Rather than bringing all funds into the brokerage first, reconciling accounts, and then issuing payments, we can often accomplish everything at closing.
Agents receive a clear statement showing:
- Gross commission earned by the brokerage.
- Brokerage fee.
- Any approved disbursements.
- Final amount paid.
Simple. Transparent. Efficient.
Why Doesn’t Every Transaction Use a DA?
While DAs are our preference, there are situations where they simply aren’t available.
Rentals
Many rental commissions are not paid through a title company closing.
Instead, funds are often paid directly from a landlord or property owner to a broker, who then distributes compensation according to brokerage agreements.
Because there is no traditional title closing, a CDA may not be an option.
Referrals
Referral fees can sometimes be paid through a CDA, but not always.
Depending on the timing, transaction structure, closing company, or participating brokerages, referral payments may instead be processed after closing through traditional brokerage accounting.
Builder-Owned Title Companies
One of the most common questions we hear is:
“Why won’t the builder’s title company do a CDA?”
While every company has its own policies, builder-owned title companies are often more restrictive regarding commission disbursement requests.
In many cases, they limit disbursements to what is specifically reflected in their approved closing procedures and internal compliance requirements. Industry discussions often point to risk management, audit controls, lender requirements, and RESPA-related compliance concerns as reasons why some builder-affiliated settlement companies prefer not to process extensive third-party commission disbursements. When that happens, the brokerage simply receives the funds and distributes compensation afterward.
The important takeaway is that a title company’s refusal to process a CDA usually reflects its internal policies, not any issue with the agent or transaction.
The Bottom Line
A CDA is not a way to pay commissions “around” the brokerage.
It’s the exact opposite.
A CDA is an authorization from the brokerage instructing the title company how to distribute funds that belong to the brokerage.
The brokerage earns the commission.
The brokerage authorizes the disbursements.
The title company follows those instructions.
For agents, the benefit is simple: faster payment, fewer delays, less paperwork, and greater transparency.
At Easy Realty, whenever possible, we use disbursement authorizations because we believe agents should be paid quickly, accurately, and with complete visibility into how every dollar was distributed.
That’s what a DA is, and that’s why we use them.
