Commission Disbursement Authorization (CDA): What It Is and How to Create One

A commission disbursement authorization (CDA) is a document a brokerage sends to the closing company — the title company, escrow company, or closing attorney — telling it exactly how to pay out the commission when a deal closes. It states who gets paid, how much, and where the money goes.

This guide explains what a CDA is, what every field on the form does, and how to create and send one in five steps. You also get a CDA example you can copy and a free template you can download. And if you would rather skip the manual math, we will show you how to generate a CDA automatically from your transaction.

• 35% of employees would leave a job after being paid incorrectly just once (Portfolio Payroll)
• 22% of employees say they have been paid late (Portfolio Payroll)
• 5 steps to create a complete CDA — from sale details to signature

A commission disbursement authorization (CDA) is an official document that instructs the closing company — title, escrow, or attorney — how to distribute the commission from a real estate sale. It lists each party owed money, the amount each receives, and the payment instructions, and it carries the broker's authorizing signature. Without it, the closing agent cannot release commission funds.

In plain terms, a CDA is a payment request from the brokerage to whoever is holding the money at closing. Most state real estate boards allow a brokerage to present a CDA and have the closing entity disburse funds directly to the parties named on it, instead of routing the entire commission through the brokerage first.

That direct path is the whole point. Rather than the closing company sending one lump commission to the brokerage — which then has to deposit it and cut checks to agents — the CDA lets the closing company pay each party as instructed. Agents get paid faster, the brokerage handles less money in transit, and there is a clear paper trail of who was owed what.

You will also see the acronym written as "CDA" in mortgage and appraisal contexts, where it means something entirely different (a Collateral Desktop Analysis). In a real estate transaction's back office, CDA means the disbursement document described here.

CDA traditionally stood for "Commission Disbursement Authorization." After the 2024 National Association of Realtors (NAR) settlement changed how buyer-agent compensation is handled, many brokerages and forms renamed it "Compensation Disbursement Authorization." The document does the same job — only the word "commission" became "compensation."

If you see both names in the wild, that is why. The settlement shifted industry language away from "commission" in places where compensation can come from multiple sources and be negotiated differently than before. The form's function did not change: it still tells the closing company how to disburse the money owed on a deal.

For your own brokerage, use whichever term your state forms and your closing companies use. What matters is that the document is accurate, authorized, and clear. Throughout this guide we use "CDA" to cover both.

A CDA matters because it gets agents paid correctly and on time, and protects the brokerage. Specifically, it:

• Speeds up payment — agents can be paid directly at closing instead of waiting for the brokerage to receive, deposit, and redistribute funds.
• Prevents disputes — every party's share is documented and verified before money moves.
• Creates a clear record — the disbursement is in writing, signed, and traceable.
• Reduces brokerage risk — less money passing through the brokerage's own account in transit.

Getting paid wrong is a fast way to lose people. One report found that 35% of employees would leave their business if they were paid incorrectly even once, and 22% said they had been paid late. Commission is the engine of an agent's income, so payment accuracy is not a back-office nicety — it is a retention issue.

A CDA sent to the closing company ahead of closing is the simplest way to make sure the payout is fast and right. It turns a potential argument into a documented instruction.

Every CDA contains the same core fields, even though the layout varies by brokerage and state. Here is what each section captures and why.

A few field-level details that trip people up:

• Brokerage gross vs. net. State the full commission and the brokerage's portion clearly, so the closing company can reconcile the line items back to the total.
• Referral commissions. Decide whether the closing company sends the referral straight to the referring party or to your brokerage to pass on. If it routes through you, include the referral inside your brokerage net amount so it is not double counted.
• Combined fees. If your brokerage collects a franchise fee and then pays it out separately, add the franchise fee and brokerage commission together and list them as one payment to the brokerage.
• Payable entities. Many agents need checks made out to their legal business entity (an LLC or corporation) rather than their name. Capture the entity name and any tax information in the payment instructions.
• Top and bottom instructions. Many brokerages include two sets of instructions — one near the top, one near the bottom — so directions stay next to the sections they apply to. A common closing line is: "When signed below, the total commission is authorized to be disbursed and delivered as indicated."

Follow these five steps to create a complete CDA:

1. Fill out the sale information and commission overview — property, parties, key dates, sale price, and total commission.
2. Add the closing company contact — the specific title/escrow officer or attorney handling disbursement.
3. List each net payable line item — calculate what every party receives: agents, brokerage, deductions, and referrals.
4. Add payment instructions — how and to whom each payment is made, including entity and tax details.
5. Sign and send — the authorized person signs, then the CDA goes to the closing company.

Step 1: Fill out the sale information and commission overview

Start with the high-level facts. The closing company likely already has much of this, but the CDA needs to state clearly which deal the commission applies to. Include the property address, buyer and seller information, contract acceptance date, closing date, sale price, gross commission, and brokerage gross commission.

Step 2: Include the closing company contact information

Address the CDA to the specific person handling the closing. This documents which escrow or title officer (or attorney) is responsible for executing the instructions and who to contact if an error comes up. Include the closing company name, contact name, email, and phone.

Step 3: Add each net payable line item

Now calculate how much each party is paid from the commission: agent-earned commissions, brokerage commission, deductions paid to outside parties, and referral commissions. Determine each payee line item. Some closing companies pay individual payees directly; others can only pay the brokerage, which then distributes. If your brokerage collects franchise fees and pays them separately, combine the franchise fee and brokerage commission into one line. Do not forget referrals — decide who the referral is due to and include it in your brokerage net if it routes through you.

Step 4: Add payment instructions

Instructions vary, but the CDA should state clearly how the closing company makes each payment, notifies payees, and confirms. For example, an agent may need a check cut to their legal business entity rather than their name — capture the entity name and tax details. Direct deposit, delivery, or pickup instructions belong here too. Including two sets of instructions (top and bottom) keeps directions clear and next to the relevant sections.

Step 5: Sign and send the CDA

The final step is the authorizing signature. Once the authorized person signs, send the CDA to the escrow officer, title officer, or attorney handling the closing.

Here is a simplified CDA example for a $400,000 sale with a 3% listing-side commission, a 70/30 agent split, and a referral. Use it as a model for your own form.

Commission Disbursement Authorization — Example

Sale overview

• Property: 123 Main Street, Anytown, ST 00000
• Seller: Jane Seller | Buyer: John Buyer
• Contract acceptance date: [date] | Closing date: [date]
• Sale price: $400,000
• Listing-side gross commission (3%): $12,000

Closing company

• Company: Anytown Title & Escrow
• Attn: Escrow Officer, [name] | [email] | [phone]

Net payable line items

Payment instructions

• Pay listing agent by check to "Listing Agent LLC," EIN on file. Deliver by overnight mail.
• Pay brokerage by direct deposit to account on file.
• Send the referral to our brokerage; we will disburse to the referring brokerage.

Authorization

• "When signed below, the total commission is authorized to be disbursed and delivered as indicated."
• Authorized by: [Broker name], [date], signature.

Numbers are illustrative. Your splits, fees, referral handling, and payable entities will differ by agent and by deal — which is exactly why the math is worth automating.

Filling out a CDA by hand on a PDF works, but it creates three recurring problems:

• Commissions are hard to calculate — splits, caps, tiers, flat fees, franchise fees, and referrals all change the math.
• It is slow — the gap between closing and payment stretches, sometimes with a trip to pick up a physical check.
• It is error-prone — one wrong line item turns a payout into an administrative headache and an unhappy agent.

Commissions are challenging to calculate. The net paid to an agent or kept by the brokerage depends on the plan that agent negotiated — a flat fee, a percentage split, a commission cap, tiered thresholds, lead-source incentives, or some combination. Each one changes what lands on the CDA and what hits your bank account. Doing that math by hand, deal after deal, is where mistakes creep in.

It is cumbersome. Everyone wants the time between closing and payment to be short. A manual CDA process is the opposite — slow, repetitive, and sometimes dependent on physically collecting a check.

It is easy to make errors. When you are hand-calculating line items and payees, a single slip pays someone the wrong amount. That is more than an annoyance; it is the exact thing that drives agents to leave.

Accurate real estate commission tracking makes CDAs easier because splits, fees, and payouts are already organized inside the transaction.

The brokerage creates the CDA — usually the broker, an office admin, or the transaction coordinator. Create it before closing and send it to the closing company ahead of the closing date, so funds can be disbursed correctly the moment the deal closes.

Whoever holds responsibility for back-office accuracy owns the CDA. In many offices that is the transaction coordinator or commission admin, working from the brokerage's commission plan. They have the detail and the authority to get it right and in compliance.

Timing matters. A CDA created and sent ahead of closing means the closing company already has its instructions when the deal funds — no waiting, no last-minute scramble. Accurate commission tracking throughout the deal makes this painless, because splits, fees, and payouts are already organized inside the transaction by the time you need the CDA.

You can download and fill out a standard CDA template, or build one with the interactive tool below. Both work.

If you create CDAs regularly, doing the calculations by hand is the slow part. Paperless Pipeline is real estate transaction management software with a built-in Commission Module that generates the CDA as you calculate the deal:

• The commission math is done for you. Splits, caps, tiers, flat fees, franchise fees, agent and client fees, referrals, and earnest money are calculated in a few clicks.
• The CDA is created from the deal. Once commissions are calculated, your CDA is generated with the line items already populated — with disbursement options, an authorization signature, payable LLC/Corp details, custom instructions, and referral settings.
• Send it straight to the closing company from inside the transaction, and keep a clean record of what was sent.

If you would rather your team focus on closing deals than on disbursement paperwork, see how the Commission Module creates CDAs. You can try Paperless Pipeline completely free for 14 days — no credit card required — and see exactly how the commission management software simplifies the CDA process from start to finish.