A cooperating commission looks like a deal between two people. Under Ontario’s rules it never is — it is a deal between two brokerages, and the point where agents get this wrong is exactly where a disclosure step gets skipped.
Key takeaways
Two agents work a deal from opposite sides — one brings the buyer, one holds the listing — and agree, informally, to split what the buyer’s side earns. Or one agent refers a client to a colleague who specializes in a different area and expects a cut for the introduction. Both situations feel like a private arrangement between two people. In Ontario, neither one is. TRESA and RECO route the money through the brokerages, not the agents, and the disclosure duty that comes with it is where most of the actual compliance risk sits.
RECO’s bulletin on financial benefits is direct about this: “An agent is prohibited from receiving payment directly from any source other than the brokerage where they are employed.” A cooperating commission on a co-listed or co-brokered deal is not an exception to that rule — it is exactly the case the rule is written for. The buyer-side brokerage collects its share, the listing-side brokerage collects its share, and each brokerage then pays its own agent according to that agent’s own remuneration arrangement with the brokerage. The two agents never exchange money directly, even where they privately agreed on a 50/50 or a different split before the deal closed.
The same logic applies to a referral fee between agents at different brokerages. If Agent A refers a client to Agent B and they’ve agreed Agent A gets a cut of Agent B’s eventual commission, that fee still has to flow Agent B’s brokerage → Agent A’s brokerage → Agent A. A direct payment between the two agents — even a fully disclosed, fully agreed one — runs into the same prohibition.
RECO defines a financial benefit broadly: any benefit — a payment, a fee, a service — that an agent or a person related to them receives, or expects to receive, in connection with services provided to a client, beyond the remuneration set out in the representation agreement. A cooperating split and an inter-agent referral fee both fit that definition. The disclosure trigger is early and it is not optional: “An agent must disclose to the client as soon as possible after the agent knows or ought to know they may…receive a payment or a service from a third party.” The disclosure has to include an estimate of the amount or value, whether it is direct or indirect, and any conditions attached to it. The agent then has to make best efforts to get a written acknowledgement from the client that the disclosure was received, and provide the client a copy.
RECO’s bulletin carves out a narrow exception for a “related person” — defined as a spouse, a child of the agent, an agent who is the child of the payer, a relative by blood, marriage or adoption of the agent or the agent’s spouse or child, or a person the agent is “associated with” within the meaning of subsection 1(2) of TRESA. Even inside that exception, the disclosure obligation doesn’t disappear — the client still has to be told about the relationship between the agent and the person receiving the benefit. It is a narrower carve-out than most agents assume: a business partner, a mentor, or a close friend who happens to also be an agent does not qualify just because the relationship is close. The definition is specific to family and marriage, not to trust.
A disagreement over how a cooperating commission should be split — who actually procured the buyer, whether a referral fee was properly earned — puts the disputed amount into a brokerage trust account rather than anyone’s pocket while it’s worked out. RECO’s rule on unclaimed trust money sets the outer limit on how long that can sit unresolved: “all unclaimed money held in trust for more than two years must be paid to RECO,” with a narrow de minimis exception for amounts under $25. Interest earned on the funds while they sit in trust has to be forwarded along with the principal. In practice this means an unresolved commission dispute has a real deadline, even if neither side is actively pushing it — the brokerage’s trust obligations force a resolution or a hand-off to RECO well before the two-year mark becomes convenient to ignore.
There is no fixed rate for a commission split any more than there is for the underlying commission itself — “There is no standard rate fixed by law or by any regulator, so the number in your listing agreement is the number,” and the same is true of whatever split percentage two brokerages agree between themselves. What is fixed is that HST applies on top of the commission, and when a remuneration arrangement is documented — for instance a seller compensating a buyer’s brokerage directly inside the agreement of purchase and sale — RECO requires the clause to state a specific dollar figure “plus applicable taxes,” alongside the parties, the purpose, the timing, and who pays whom. A cooperating split inherits the same shape: whatever the two brokerages agree, HST sits on top of it, and it is accounted for at the brokerage level before either agent sees a share.
A Personal Real Estate Corporation does not create a new channel for moving commission money between agents. RECO is explicit that a PREC-holding agent “does not receive, directly or indirectly, remuneration for trading in real estate from any person or entity other than the personal real estate corporation or the brokerage,” which means the same brokerage-to-brokerage-to-agent (or, with a PREC, brokerage-to-brokerage-to-PREC-to-agent) routing still applies. A split doesn’t skip a step because the receiving agent happens to be paid through a corporation instead of personally.
Two brokerages cooperate on a sale: Brokerage A holds the listing, Brokerage B represents the buyer. The agreement of purchase and sale documents the seller’s remuneration to Brokerage B, including HST, with a stated dollar figure and payment on closing — the five elements RECO’s remuneration-clause bulletin sets out. On closing, the trust funds move from the real estate lawyer’s office to each brokerage according to that clause. Brokerage A then pays its listing agent according to the agent’s own commission plan with the brokerage; Brokerage B does the same for its buyer agent. If Brokerage B’s buyer agent had privately promised a referral fee to a colleague at a third brokerage for the original introduction, that fee is disclosed to the buyer client at the point it becomes known, and it is paid Brokerage B → the colleague’s own brokerage → the colleague — never agent to agent directly, and never before the client has been told it exists. The tax side of that same routing — what actually lands with you once HST and your own brokerage’s fee structure are accounted for — is covered in what your split really costs after fees.
No. RECO Bulletin 3.3 prohibits an agent from being paid directly by anyone other than their own employing brokerage, and that includes another agent. Both agents’ shares have to be paid through their own brokerages, even where the amount and split were fully agreed between the two of you in advance. A disputed split runs into the same trust-account routing as any other commission dispute — see how a commission trust agreement works.
RECO’s bulletin lists the kinds of third parties — home inspectors, lawyers, mortgage brokers — who commonly pay agents a financial benefit, but it does not directly address the reverse case of an agent paying an unlicensed referral source. That specific question is not answered in RECO’s published bulletins. Treat it as a question for your broker of record before acting on it, not an assumption you can resolve on your own. For a related, more common gap in the same area, see a real case of HST being missed on a commission invoice.
No. Money still has to flow brokerage to brokerage, and then to your PREC or to you personally under your existing arrangement with your own brokerage. A PREC changes how you’re paid by your brokerage — it does not create a separate channel for one agent to pay another directly.
A short call is enough to check your disclosure paperwork actually matches how the money is really moving.
