Glossary / Commissions and splits
Also known as: Commission letter, fee agreement, brokerage agreement
A commission agreement is the written contract that sets whether a leasing broker gets paid, how the commission is calculated, who pays it, and when it becomes payable. In commercial leasing it is often a short letter between the broker and the landlord.
According to the SIOR Report, a commercial leasing commission agreement is "often in letter form, typically negotiated at the outset of the transaction," and it governs the broker's pay where no exclusive listing agreement covers the deal. It names the parties, the property, the commission rate or schedule, and the events that trigger payment. The New York City Bar's model office brokerage agreement, for example, calculates the commission on base rent using rates that can change by lease year, and leaves a blank for the payment date or installment schedule. Whether an agreement must be in writing to be enforced varies by state, so this is not legal advice.
This is the document that decides both how much you earn and when you get it. SIOR notes that landlords often try to delay payment until "at least payment of the first month's rent" or tenant occupancy, while brokers argue the job is done when the lease is signed. In a separate SIOR article, attorney James Hochman writes that broker-drafted agreements usually treat the commission as earned at Lease execution, but that sometimes it is payable only "when and if the tenant takes possession of or occupies the space."
Other clauses decide whether you get paid at all if circumstances change. Hochman recommends commission protection for foreclosure and eminent domain, warning that without it "your chances of recovery are slim." The NYC Bar model requires a buyer of the building to assume the landlord's commission obligations in writing, or the original landlord stays liable. SIOR also flags renewal and expansion language, indemnities, and what happens if the tenant changes brokers mid-deal. A Leasing commission is only as collectible as the agreement behind it.
Get the commission agreement signed before the deal moves, and read the payment trigger, the renewal clause, and the sale-of-building clause before you rely on the money.
