A broker demand form is the written payment instruction a brokerage sends to the escrow or title company, telling the settlement agent exactly how much commission to deduct from closing proceeds and where to send it. To complete it correctly, pull your figures directly from the listing agreement and executed purchase contract, fill in the escrow file number and principal names exactly as they appear on those documents, have the broker of record sign it, and deliver it to escrow with enough lead time for the officer to reconcile it against the file before closing.
What the Form Needs to Contain
Broker demand forms vary by company and region, but the core fields are consistent. At minimum, the form identifies the escrow or title company receiving the instruction, the escrow file number, and the names of the buyer and seller exactly as they appear on the purchase contract. It states the compensation amount, either a flat dollar figure or a calculated percentage of the sale price, with the payment terms. Some states prescribe the content by statute and require the broker to certify that a valid written compensation agreement exists with the principal who owes the commission.
Beyond those basics, most escrow companies expect every demand to carry:
- The full street address and legal description of the property, often including the assessor’s parcel number, so the demand matches the title documents without ambiguity.
- The brokerage’s active state license number, which the escrow officer checks against the state licensing database before releasing funds.
- The brokerage’s EIN, or a Social Security number for a sole proprietor, for the escrow company’s IRS reporting.
- Wire instructions or a mailing address. Wires are faster; paper checks add a day or two.
- The signature of the broker of record or an authorized officer of the brokerage, not an individual sales agent.
Who Has Authority to Sign
The signature on a broker demand binds the brokerage to the payment terms stated in the document. That authority belongs to the designated broker of record, the individual whose license is associated with the firm, or to a branch manager who has been granted signing authority. Individual sales agents generally cannot sign on their own, because the commission contract runs between the principal and the brokerage entity, not between the principal and the agent personally.
The brokerage’s license must be active and in good standing on the date escrow disburses funds. If the license has lapsed, been suspended, or been revoked before closing, the escrow holder will hold the funds rather than pay a commission to an unlicensed entity, which would violate real estate licensing laws in virtually every state. Resolving the licensing status is then on the brokerage before any money moves.
One boundary worth noting: when a single brokerage represents both sides of the deal, the demand may reflect the full commission rather than a cooperating split. Escrow officers scrutinize dual-agency demands more closely, and some will ask for a copy of the signed dual agency disclosure before processing payment.
Preparing the Form So It Matches the Contract
Open the listing agreement and the executed purchase contract side by side. Every number on the demand must trace back to one of those two documents. If the listing agreement calls for a 5% total commission and the purchase contract specifies a cooperating broker split, the demand should reflect only the portion owed to your brokerage. The cooperating broker submits a separate demand for their share.
Commission structures look different than they used to. Since the 2024 MLS policy changes following the National Association of Realtors settlement, offers of cooperative compensation to buyer brokers can no longer be made through the MLS, and buyer brokers must now enter into written agreements with their clients that specify the amount or rate of compensation before touring homes. Compensation must be described in terms that are “objectively ascertainable and not open-ended.”1National Association of Realtors. Summary of 2024 MLS Changes The source of a buyer broker’s commission may now be the buyer rather than the seller, and the demand needs to reflect whatever arrangement was actually agreed to, not an assumed MLS-published split.
Check that the names on the demand match the names on the title report character for character. “John A. Smith” is not “John Smith” as far as escrow is concerned. The same goes for the property address and escrow file number. These are the fields that cause the most avoidable delays. A single transposed digit in the escrow number sends the demand to the wrong file, and a name mismatch triggers a manual review that can eat two or three business days.
Submitting It to Escrow
Most brokerages submit the completed demand electronically, through encrypted email, a transaction management platform, or the escrow company’s own secure portal. Paper submissions still work but slow things down. Whichever method you use, get the demand to escrow well before the scheduled closing date. Submitting early gives the escrow officer time to compare it against the purchase contract, flag discrepancies, and request corrections without putting the closing timeline at risk.
After sending, request a written acknowledgment from the escrow officer confirming receipt and the file number the demand was logged under. This step is easy to skip and expensive to regret. A demand that goes missing in an inbox or gets filed under the wrong escrow number may not surface until the settlement statement is drafted, by which point the fix has to happen under deadline pressure.
What Happens Once Escrow Has the Demand
The escrow officer takes the figures from the demand and plugs them into the settlement statement. For most residential transactions involving a mortgage, that statement is the Closing Disclosure, the five-page form that replaced the HUD-1 Settlement Statement for loans applied for after October 3, 2015.2Consumer Financial Protection Bureau. What Is a HUD-1 Settlement Statement Real estate commissions appear on page two under the “Other Costs” section, with separate line items for the listing broker and the buyer’s broker.3Consumer Financial Protection Bureau. Closing Disclosure Sample Form Cash deals and transactions without a federally regulated mortgage lender may use a different settlement format, but the commission still appears as a deduction from the seller’s proceeds, or, under the current rules, potentially as a buyer cost.
Both parties review and sign the settlement statement before closing. If the commission figure doesn’t match what was agreed to in the listing or buyer-broker agreement, that’s the last checkpoint to catch the error. Lenders are required to deliver the Closing Disclosure at least three business days before closing, so the numbers should not be a surprise at the table.
Once the deed records and all buyer funds have cleared the escrow account, the escrow company begins releasing payments. Commission wires or checks to brokerages typically go out within one to two business days of recording. Wires land the same day they’re sent; paper checks add mailing time.
If the Commission Gets Disputed
When a seller contests the commission amount, when two brokerages both claim the cooperating side, or when a deal collapses and the parties disagree about whether the commission was earned, escrow’s first move is to hold the disputed funds rather than distribute them to either side. Escrow officers have no authority to decide who deserves the money.
If the parties can’t resolve the disagreement on their own, the escrow holder may file an interpleader action, a court filing that deposits the disputed funds into the court’s registry and asks the court to decide who gets paid. The escrow agent’s attorney fees and court costs come out of the deposited funds first, which reduces what the eventual winner receives. Getting the demand right the first time is cheaper than fighting over it later.
What RESPA Lets the Demand Direct
Any transaction involving a federally related mortgage loan falls under the Real Estate Settlement Procedures Act. Section 8 of RESPA prohibits paying or accepting fees, kickbacks, or anything of value in exchange for referring settlement service business, and it bars fee-splitting for settlement services unless the person receiving a share actually performed services to earn it.4Office of the Law Revision Counsel. 12 USC 2607 – Prohibition Against Kickbacks and Unearned Fees The traditional split between a listing broker and a buyer’s broker is legal under a safe harbor for cooperative brokerage, because both brokers are performing real services.
What a broker demand cannot do is direct escrow to pay a portion of the commission to an outside party, such as a mortgage lender, home inspector, or contractor, as a thank-you for sending business the broker’s way. Violations carry penalties of up to $10,000 in fines, up to one year of imprisonment, and civil liability for treble damages, meaning three times the amount of the improper charge.4Office of the Law Revision Counsel. 12 USC 2607 – Prohibition Against Kickbacks and Unearned Fees The demand should reflect compensation for actual brokerage services and nothing else. If a referral fee is part of the arrangement, the referring party needs to hold an active real estate license and the relationship needs to qualify as cooperative brokerage. Payments to non-broker third parties for referrals don’t belong on the demand.