November 01, 2025

What is a CDA in Real Estate?

A CDA, or Commission Disbursement Authorization, in real estate is a critical document that tells the escrow company or closing company how to distribute commission payments once a real estate transaction closes. It outlines which agents, brokers, and other parties involved should be paid, how much each receives, and where the funds should be sent. The CDA form ensures commissions are paid accurately, on time, and in accordance with the brokerage agreements, commission plans, and agreed upon terms outlined in the purchase agreement. Without it, the escrow agent cannot legally release funds, delaying payments to real estate professionals.

The document includes a detailed breakdown of the total commission, including how much each agent or broker should receive. It reflects commission plans and brokerage agreements that were agreed upon before closing. By providing clear disbursement instructions, the commission disbursement authorization form ensures transparency and eliminates potential disputes over money or payments.

Key Elements of a Commission Disbursement Authorization

A commission disbursement authorization (CDA) isn’t just a simple form—it’s a critical document containing several key details that help ensure accuracy and compliance in real estate transactions. Each brokerage or title company may have slightly different formats, but the essential elements remain consistent across the industry.

Here are the key elements you’ll find in a CDA form:

Property Information – Includes the property address, seller information, and buyer information to identify the specific transaction.
Brokerage and Agent Details – Lists all brokers involved, including the listing broker, buyer’s broker, and their respective real estate agents.
Commission Breakdown – Provides a detailed breakdown of the gross commission and how it will be disbursed among the parties involved.
Payment Instructions – Specifies how each commission check will be issued and where the funds will be sent.
Broker Authorization – Includes signatures from the real estate broker or managing broker approving the commission disbursement.
Compliance Section – Ensures the transaction adheres to brokerage policies, real estate law, and agreed upon terms within the purchase agreement.

Without these details, the escrow agent or closing agent cannot verify how to pay each party, potentially delaying the payment process.

The CDA Process: From Creation to Disbursement

The CDA process follows a structured series of steps designed to ensure that commission payments are handled efficiently, accurately, and in compliance with real estate law.

Here’s how the process typically unfolds:

Transaction Review – The back office team or closing agent reviews the real estate transaction to confirm that all required documents, such as the purchase agreement, are signed and complete.
CDA Creation – The real estate broker or brokerage prepares the commission disbursement authorization form, outlining the total commission, parties involved, and payment instructions.
Broker Sign-Off – The managing broker verifies the information, ensuring it aligns with the brokerage agreement and internal commission plan, before signing the CDA.
Submission to Escrow or Title Company – The finalized CDA form is sent to the escrow company or title company, which holds the funds in an escrow account until closing.
Final Review and Approval – The escrow agent verifies the disbursement instructions and confirms that all conditions for closing are met.
Funds Disbursed – After closing, the commission disbursement authorization (CDA) allows the closing company to disburse the funds—ensuring each agent, broker, and party gets paid directly as outlined.

This process provides a safeguard for busy real estate professionals, ensuring their compensation is processed correctly while maintaining compliance and reducing disputes.

The Role of Escrow and Title Companies in Commission Disbursement

The escrow company and title company play vital roles in managing the financial side of any real estate transaction. They act as neutral third parties responsible for holding the funds, verifying transaction details, and executing disbursement instructions once all parties meet their contractual obligations.

When a CDA is submitted, the escrow agent uses it as a roadmap to issue commission checks according to the agreed upon terms in the purchase agreement. This ensures that the funds are disbursed only after verifying that the property sale has officially closed and all documents have been signed.

The title company also ensures compliance by cross-checking the commission disbursement authorization form with the brokerage agreements and other supporting documents. This prevents payment disputes, helps ensure transparency, and guarantees that real estate professionals are paid accurately.

Together, these entities uphold the integrity of the CDA process, allowing brokers, agents, and closing agents to focus on their business—confident that the financial aspects of the deal are being handled correctly.

How to Create a Commission Disbursement Authorization Form

Creating a commission disbursement authorization form is a standard task for every real estate brokerage, but accuracy is crucial. Errors in the CDA form can delay payments, cause disputes, or even lead to compliance issues.

Here’s how real estate professionals typically create and finalize a CDA:

Gather Transaction Details – Start by collecting all relevant sale information, including the property address, seller, buyer, and purchase agreement details.
Confirm Brokerage Agreements – Review the brokerage agreements and commission plan to ensure the payout amounts align with agreed upon terms.
Calculate the Total Commission – Determine the gross commission from the property sale, factoring in fees, referral splits, or shared commissions between brokers involved.
Include Payment Instructions – Add clear disbursement instructions specifying who receives what portion of the commission and where to send each commission check.
Verify Compliance – Ensure the CDA follows state real estate law and your brokerage’s policies regarding commission disbursement.
Broker Review and Signature – The real estate broker or managing broker must review and sign the form before it’s sent to the closing company or escrow company.

A properly completed CDA ensures that agents, brokers, and other relevant parties are paid directly without unnecessary delay once the transaction is finalized.

How the Back Office Ensures Accuracy and Compliance

Behind every successful real estate transaction is a back office team ensuring that all financial and procedural details are accurate before any money changes hands. These professionals verify CDA forms, reconcile commission payments, and maintain proper documentation to ensure full compliance with state and federal regulations.

The back office responsibilities typically include:

Reviewing CDA Forms: Confirming that all property, brokerage, and agent information matches the purchase agreement and transaction details.
Checking Commission Splits: Verifying gross commission totals, calculating agent-broker splits, and ensuring each party receives the correct amount.
Ensuring Signatures: Making sure every CDA is properly signed by authorized brokers and closing agents.
Communicating with the Escrow Company: Coordinating with the escrow agent or closing company to confirm receipt and proper disbursement of funds.
Maintaining Documentation: Keeping copies of commission disbursement authorizations, payment instructions, and related documents for legal compliance and future auditing.

By handling these responsibilities, the back office prevents costly mistakes, protects the interests of all parties involved, and ensures the commission disbursement process runs smoothly and transparently.

If you're planning to move to Western New York, or if you're already a local resident, understanding how commission disbursement works in a real estate transaction is just one part of navigating the market in your area. For more helpful tips on the Western New York real estate market, be sure to check out Carol Klein WNY Homes, where we cover guidance for buyers, sellers, and real estate professionals.