What Is a Commission Disbursement Authorization (CDA)?

What a CDA Is

A CDA is a written instruction from the brokerage to the closing agent.

It tells the title company or escrow agent:

• Who gets paid
• How much they get paid
• Where the money should be sent

The CDA controls how the commission is divided between:

• The brokerage
• The listing agent
• The buyer’s agent
• Any referral parties

It is the official breakdown of commission at closing.

Why a CDA Exists

Without a CDA, the closing agent would send the full commission to the brokerage.

Then the brokerage would process and pay the agents afterward.

A CDA allows the brokerage to:

• Authorize the split in advance
• Speed up payment
• Ensure accuracy at closing

The broker still controls everything. The CDA simply carries out the broker’s instructions.

Who Creates and Signs the CDA

The CDA is created by the brokerage or its back office.

It must be approved and authorized by the broker.

This is the most important part:

The broker is the one giving instructions.

Not the agent.

That is what keeps everything compliant.

Does a CDA Bypass the Broker?

No.

This is a common misunderstanding.

A CDA does not bypass the broker.

The broker is still:

• The party earning the commission
• The party controlling the funds
• The party authorizing the payout

The closing agent is simply following the broker’s written instructions.

How a CDA Works at Closing

At closing, the commission is part of the transaction.

The money flows into the closing agent’s account.

The CDA is then used to:

• Break the total commission into parts
• Direct those parts to the correct recipients
• Pay everyone at the closing table

Without a CDA, all funds would go to the brokerage first.

When a CDA Is Used

A CDA is typically used when:

• The brokerage wants agents paid at closing
• There are multiple parties involved
• There are referral fees or splits
• The brokerage wants faster disbursement

It is standard practice in many transactions.

What Happens Without a CDA

If there is no CDA:

• The full commission is paid to the brokerage
• The brokerage processes the funds internally
• The brokerage then pays the agents

This is called a single-check closing.

Why This Matters

Understanding CDAs helps you:

• Understand how you get paid
• Avoid compliance mistakes
• Know who controls the money
• Understand the role of your broker

It also reinforces the core rule:

All commission is controlled by the brokerage.

Bottom Line