The owner usually pays the commission: the seller on a sale and the landlord on a lease. That one fee also covers the broker who brings the buyer or tenant. The owner promises the fee in a listing agreement, the contract that hires a broker to sell or lease the property. The listing broker then shares it with the cooperating broker, who represents the other side. According to the Bureau of Labor Statistics (BLS), one commission often pays both agents, their brokers and their firms (BLS, shared commissions).
Ontario's standard form shows the same pattern. Most commercial leases in Ontario use Form 525 of the Ontario Real Estate Association, according to the law firm McMillan (McMillan, Ontario listing form). The landlord generally pays the tenant's broker too. That share typically is 50% of the total commission payable by the landlord (McMillan, tenant broker share).
| Deal | Who usually pays | Who receives the commission |
|---|---|---|
| Sale | The seller, from the sale proceeds at closing | The listing broker, who shares it with the buyer's broker |
| Lease | The landlord | The listing broker, who shares it with the tenant's broker |
| Lease for a Florida state agency | The landlord, who pays the agency | The agency, which pays its own tenant broker |
| Deal under a buyer or tenant agreement | The buyer or tenant, as its own agreement says | The broker it hired |
The landlord pays in most leases, and the money can reach the tenant's broker by more than one route. Florida sends it through the tenant for its own state offices. Under state law, the state agency pays the tenant brokers who work for it (Florida, state tenant brokers). Such a broker may not take pay directly from the landlord for its work under the term contract. The landlord still funds the deal: the statute refers to "Moneys paid by a lessor to the state agency under a facility leasing arrangement."
The federal government keeps part of the commission as a rent reduction, which the guide to commission credits on GSA leases sets out. A private tenant can bargain for the same thing in its own broker agreement.
The 2024 settlement of the National Association of Realtors (NAR) changed how buyers' agents get paid on homes. Its FAQ states that the settlement "is focused on residential real estate transactions" (NAR, settlement FAQ). It adds: "That means most commercial transactions will not be affected." In many markets, commercial listings sit in commercial information exchanges and "do not include an offer of compensation" at all.
The settlement's practice changes took effect on August 17, 2024. NAR says its rule on written buyer agreements before showings is "focused on residential transactions" (NAR, written agreement rule). That rule leaves out commercial transactions and leases. Commercial buyers and tenants still negotiate who pays their broker deal by deal.
The listing agreement sets the commission, usually as a percentage of the price on a sale or of the rent on a lease. The BLS writes that "The commission varies by the type of property and its value" (BLS, commission varies). Ontario leases use three models: a fixed rate per square foot, a percent of the rent over the lease term, or a hybrid (McMillan, commission models). The rent figure itself comes from the lease, as commercial rent calculations show.
Here is what a commission does to a sale, at an assumed 4% rate and an even split between the two firms:
| Step | Amount |
|---|---|
| Sale price | $4,000,000 |
| Commission at an assumed 4% | $160,000 |
| Listing broker's firm, half | $80,000 |
| Buyer's broker's firm, half | $80,000 |
| Seller's proceeds after the commission | $3,840,000 |
Each firm then pays its own agent the share their contract sets. The seller's listing agreement decides the real rate and split.
The BLS also tracks what brokers charge for this work. Its producer price index for brokering nonresidential property sales stood at 159.5 in September 2026, against 100 in December 2009 (FRED, sales brokerage index). It peaked at 166.2 in December 2022 and fell to 148.6 by June 2024, a drop of 10.6%. The index for brokering nonresidential leases reached 131.9 in September 2026 (FRED, lease brokerage index). It has stayed between 130.1 and 132.0 since December 2022.
Source: U.S. Bureau of Labor Statistics, Producer Price Index by industry, offices of real estate agents and brokers: nonresidential property sales (PCU531210531210601) and nonresidential property leases (PCU531210531210602), December 2009 = 100, monthly to September 2026, via FRED.
The two lines follow from how brokers price each fee. A sale commission follows the price of the building, so its index swings with the market. A lease commission follows the rent, which landlords and tenants fix for years at a time.
The landlord pays the commission to the brokerage around the start of the lease. The brokerage then pays its agent a share. Under Ontario's Form 525, the commission is payable on the earlier of occupancy by the tenant or execution of the lease (McMillan, Form 525 payment). Sales agents often work for brokers on contract and earn a portion of the commission on each property they sell (BLS, agent pay).
A renewal can pay a second commission. Form 525 can make the landlord pay the listing brokerage a further commission on the total rent of an extension or renewal (McMillan, renewal clause). McMillan suggests landlords delete that clause. Florida calls a renewal fee that needs no extra work an automatic renewal commission. The broker earns it "when the broker first earned a commission for that lease" (Florida lease commission lien act).
The brokerage agreement names the event that earns the commission and the date it falls due. Florida law sets a backstop: the broker earns it no later than the day the owner signs a sale contract that would pay it. Florida's sales commission lien act states that rule, and on a sale the contract is the purchase and sale agreement.
Earning and payment are two different dates. In Florida, a commission is payable at the time provided in the brokerage agreement, often at closing. If the agreement ties payment to an event and that event never happens, the broker "may not enforce a lien for that commission" (Florida, payment timing).
Put the agreement in writing. California's Civil Code lists contracts that "are invalid, unless they, or some note or memorandum thereof, are in writing" (California statute of frauds). The list covers a broker's commission agreement to sell real estate, or to lease it "for a longer period than one year."
A listing can also outlast its end date. A holdover clause, also called a tail, keeps the commission owed after the listing ends. It covers a buyer or tenant who learned of the property during the listing. On Ontario's Form 525, "The holdover term is typically 60 to 90 days," McMillan writes (McMillan, holdover clause).
A broker lien is a claim a broker records against an owner's property or sale proceeds to collect an unpaid commission. Florida has one for sales and one for leases. On a sale, the broker holds "a lien upon the owner's net proceeds" (Florida, lien on sale proceeds). That lien "does not attach to any interest in real property." On a lease, the lien attaches to the interest of the party that owes the commission (Florida, broker lien on leases). That is the landlord's interest in the building, or the tenant's leasehold.
Florida's sales lien also follows three rules:
- Holder: it belongs to the broker named in the brokerage agreement, and to no employee or contractor of that broker.
- Waiver: no one can waive it before the broker earns the commission.
- Disclosure: the broker must disclose those lien rights at or before the signing of the brokerage agreement, or it may not enforce the lien.
Those rules are Florida's, so check the rules where the property sits.
For a US seller, the commission lowers the taxable gain on the sale. In an example from the Internal Revenue Service (IRS), $140,000 received less $4,000 of selling expenses leaves $136,000 (IRS, sales of business property). For a like-kind exchange, it names "brokerage commissions" among the closing costs that you "Subtract ... from the consideration received to figure the amount realized." A landlord's leasing commission follows its own rules, so ask a tax adviser before you deduct one.
Owners and tenants often hold three wrong beliefs about the commission. They think the buyer or tenant never pays, and that the broker keeps every dollar. They also think anyone who refers a client can collect a fee.
A buyer or tenant pays when its own agreement with its broker makes it the payer. That happens when it hires a broker to search for property and the seller or landlord offers no cooperating fee. A tenant's broker does far more than open doors, as what a tenant rep broker does on a commercial lease explains. Read its fee clause before you sign.
In Texas, a broker can. The Texas Real Estate Commission (TREC) says a license holder may rebate part of its commission to a party to the deal (TREC, commission rebates). A rebate to a party the broker does not represent needs its own client's consent first.
A referral fee is a share of a commission paid to whoever sent the client. Licensing law limits who can take one. TREC bars a license holder from paying cash to an unlicensed person for a referral (TREC, referral rules). It treats the person paid as "an unlicensed person engaged in the business of real estate brokerage." A gift of merchandise worth $50 or less is allowed. Between two licensed brokers, the firms agree the share between themselves.