I have received many recent calls from agents asking if the broker can pay their commission to their corporation or limited liability company (“LLC”).
Old Practice.
Historically, a broker could not pay commission to the agent’s corporation or LLC. Business & Professions Code section 10137 required brokers to pay commission only to “licensed persons.”
Since agents cannot obtain a “corporate license,” and since BRE has never recognized an LLC as an entity that is eligible for a “corporate license,” brokers could only pay the agent directly.
New Practice.
Recent BRE opinions now allow an agent to be paid commission to his/her corporation or LLC. However, there are conditions that first must be respected for that payment to be deemed “lawful.”
1. First, the corporation/limited liability company cannot do anything that requires a license or engage in any activities for which a license is required. In other words, the buyer and seller should deal with the agent individually without any reference to the corporation or LLC.

2. Second, all transaction documents must be in the name of the agent and/or broker. The Purchase Agreement, Agency Disclosures, Escrow Documents and every other transaction document cannot have any reference to the unlicensed corporate or LLC entity. Once commission is received by the broker, then it can be paid to the agent’s corporation or LLC per a separate notarized instruction from the agent to the broker as set forth next-below.

3. Third, the broker must receive a notarized instruction from the agent stating:
a. that the agent is duly licensed and affiliated with the broker;
b. that the agent owns all stock in the corporation (or membership interest in the LLC;
c. that the corporation (or LLC) is properly registered with Secretary of State and in Good Standing;
d. that the corporation (or LLC) is not licensed by BRE and will not engage in any licensed activities; and
e. an instruction to the broker to pay all future commission directly to the agent’s corporation or LLC.

4. Fourth, the commission cannot be paid from escrow and can only be paid from the broker after close of escrow.
If the agent satisfies these four simple conditions, then the broker can lawfully pay the agent’s commission to his/her corporation (or LLC) upon close of escrow.
The theory allowing payment to the corporation (or LLC) is that the agent has already earned his/her commission, and the notarized instruction to the broker operates as an “assignment” of commission to the agent’s entity.

Below is a sample Request to Pay Commission for the agent and broker to use which satisfies all three requirements.
This clarifies how an agent can receive commission to his/her corporation or LLC.

Request to Pay Commission to Salesperson’s Corporation or Limited Liability Compar1v

Agent/Broker Name (AGENT)
Corporation/LLC Name (CORP)
, being duly sworn, deposes and says:
1. I am a duly licensed real estate salesperson or broker affiliated with REeBroker Group.
2. I am an owner, partner and/or stock holder of CORP.
3. CORP is a legal entity authorized to do business in the State of California, is properly registered and in good standing.
4. CORP is not licensed as a Real Estate Broker or Agent and will not engage in any activity that requires a real estate license.
5. I request that all future commissions payable to me, earned in my capacity as a salesperson with REeBroker Group be paid to CORP.
Agent/Broker (
X /

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