How Does the Commission Actually Leave Your Sale Money at Closing? It Is Not a Separate Document — It Is One Line You Already Signed

On closing day your lawyer hands you the net, not the sale price. The commission was carved out first — because months earlier, when you signed back the offer, you already gave the instruction that made it happen.

I’m Arthur Zhao. Here is the thing almost no seller pictures correctly: on closing day, your lawyer does not hand you the sale price — they hand you the net. Somewhere between “the buyer’s money arrives in trust” and “the balance lands in your account,” the commission has already been carved out and wired to the brokerages.

Sellers tend to picture that carve-out as a bill they settle after the deal closes, or as some payout form they sign on closing day. It is neither. It is a single instruction you gave weeks or months earlier — printed inside the one form you thought was only about selling the house. This piece follows the money backwards from closing day to the exact line where you authorized it, then shows you the second, quieter layer that protects the money while it moves between two brokerages.

Start on closing day, then rewind: you receive the net, not the gross

Picture the money on closing day. The buyer’s funds arrive at your lawyer’s office. Before your lawyer sends you anything, they settle the mortgage payout, adjustments, and — the part this article is about — the real estate commission plus HST. Only then does the remaining balance get released to you.

So the natural question is: when did I authorize my lawyer to hand my sale money to a brokerage before handing it to me? The answer surprises most sellers. You did not authorize it on closing day. You did it the moment you accepted the buyer’s offer — and there was no special “direction to pay” form involved.

There is no separate direction-to-pay form — it is one line in Form 100

Many sellers assume a dedicated payout document authorizes the brokerage payment. In Ontario, no such standalone document exists. What actually moves the commission out of your proceeds is text already sitting inside OREA Form 100 — the Agreement of Purchase and Sale itself. Right beside the seller’s signature accepting the offer is this (OREA Form 100, verbatim):“I, the Undersigned Seller, agree to the above offer. I hereby irrevocably instruct my lawyer to pay directly to the brokerage(s) with whom I have agreed to pay commission, the unpaid balance of the commission together with applicable Harmonized Sales Tax …, from the proceeds of the sale prior to any payment to the undersigned on completion, as advised by the brokerage(s) to my lawyer.”You are not hunting for “which document.” You are looking for “which line in the contract.” And you already signed it.

What the word “irrevocably” actually does

The heaviest word in that sentence is irrevocably. It means that once you have signed back the offer and a binding agreement exists, you cannot unilaterally change your mind and tell your lawyer to stop paying the brokerage out of your proceeds. This is not a polite request to your lawyer — it is a standing order you gave yourself that you cannot claw back.

That is also why the commission can feel like it vanished on its own: the act of consenting to the deduction happened weeks earlier, when your whole attention was on price and conditions, not on the fine print under your signature.

The two layers, side by side: one governs you, one governs the brokerages

Why the second layer exists: it protects the buyer’s brokerage

The second layer — the Commission Trust Agreement — barely touches you as a seller, but it explains how commission moves safely between two firms. In OREA Form 100’s own words (last page):“…I hereby declare that all moneys received or receivable by me in connection with the Transaction … shall be receivable and held in trust. This agreement shall constitute a Commission Trust Agreement as defined in the MLS® Rules … DATED as of the date and time of the acceptance…”It is a declaration by the listing brokerage to the co-operating brokerage: the commission money I receive on this deal is trust money. Why it matters: if the listing brokerage were to run into financial trouble — or become insolvent — before paying out the buyer-side share, that money, being trust money, does not fall into the pool available to ordinary creditors. The co-op brokerage’s share stays protected. For you it is background plumbing, but it is the reason “commission trust” exists at all.

The rate is negotiable; the sequence is not

Two things get blurred together, so let me separate them.

The rate — fully negotiable. Under the TRESA / RECO framework there is no legislated standard commission in Ontario — and the point is sharper than “custom, not law.” O. Reg. 567/05 s.23(3) expressly prohibits a registrant from indicating, directly or indirectly, that the commission is fixed or approved by the regulator, any government authority, or any real estate board or association. So “the standard Ontario commission is X%” is not just imprecise — a registrant who says it is crossing a prohibition. The amount, the split, and whether it is a percentage, a flat fee, or a discounted model are all negotiated with your listing brokerage.

Does it have to be in writing? In practice, yes — the commission is almost always set in a signed listing agreement, which is clearest for everyone and easy to prove, and it is the path you should insist on. But strictly, a signed writing is not the only legal basis for a registrant to collect. The same regulation, s.23(1), gives two routes: (a) a written agreement signed by the person who has to pay; or (b) even without that writing, where the registrant also does one of certain trigger acts — a written offer that is conveyed and accepted, showing the property to the buyer, or introducing buyer and seller to discuss the deal. The practical takeaway: do not assume that “nothing was signed” means no commission is owed — pin the commission down in writing before you list.

The sequence — not negotiable once set. After you have agreed to a commission arrangement in the listing agreement and signed back the offer, the order — commission + HST out of proceeds first, net to you second — is locked by that irrevocable instruction.

On HST: Form 100 states the amount is paid “together with applicable Harmonized Sales Tax.” Ontario HST is 13% (5% federal + 8% provincial). So whatever commission you negotiated, what actually leaves your proceeds is that figure plus 13% HST.

Arthur Zhao

Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS

VP & Branch Manager, Bay Street Group Inc.

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