Broker Agreement

Jurisdiction: Country: USA and Canada | Province or State: Federal

What is a Broker Agreement?

A Broker Agreement sets the terms between you and a licensed intermediary. The broker agrees to source deals or opportunities for you. You agree to pay them a fee when they succeed. The agreement defines the scope, timing, and payment. It also sets standards for confidentiality and conduct.

Brokers operate in many sectors. Common areas include real estate, business sales, leasing, mortgages, insurance, freight, and financing. In each case, the broker connects you with a counterparty. That could be a buyer, seller, landlord, tenant, lender, insurer, or carrier. The agreement clarifies when the broker earns commission. It also explains what the broker can and cannot do for you.

Who Typically Uses This Form?

Businesses, property owners, landlords, and franchisors use it to hire a broker to market and negotiate. Buyers, tenants, and investors use it to retain a broker for searches and due diligence. Borrowers use it to engage a mortgage brokerage to arrange lending. Shippers use it to hire a freight broker to secure carriers. Individuals use it when buying or selling a home. The document works for both consumer and business contexts. The content changes to fit the industry and the engagement.

Why Would You Need This Form?

You want clear terms on what you get and what you pay. You want protection for confidential information. You want a defined process and timeline. You also want to meet related rules on representation and disclosure. A signed Broker Agreement helps avoid disputes over fees. It sets out the commission structure and triggers. It lets you define exclusive or non-exclusive service. It sets a holdover period to protect introductions. It assigns responsibilities for marketing, showings, offers, and closing tasks.

Typical usage scenarios include a real estate listing, where you hire a brokerage to sell a property. It also includes a tenant rep deal, where a brokerage searches for space and negotiates a lease. It includes a business sale mandate, where a business broker runs a confidential process. It includes a mortgage engagement, where a brokerage sources a lender. It includes an insurance placement, where a broker recommends coverage and places policies. It includes freight brokerage, where a broker arranges transportation. In each case, the agreement tailors to that service. It names the assets or services involved. It states the fee basis and the event that triggers payment.

When Would You Use a Broker Agreement?

You use a Broker Agreement when you want a professional to connect you to the market. It applies when you need access, negotiation, and process management. It also applies when the broker must disclose and manage conflicts. Consider your goals.

If you plan to sell a home or commercial property, use a listing agreement. It sets the listing price, marketing plan, and commission. It also sets consent rules for dual representation if allowed. The broker markets the property, screens buyers, and guides the deal to closing. You agree to a fee on a completed sale.

If you seek space as a tenant, use a buyer or tenant representation agreement. It defines your search needs and the geography. It allocates the commission between landlord and tenant brokerage. It sets how the broker gets paid if you sign a lease introduced by them. You get representation, analysis, and negotiation support.

If you want to sell your business, use a business brokerage mandate. It sets a valuation range, a marketing approach, and confidentiality. It defines a success fee and a retainer. It covers a holdover period to protect introduced buyers. The broker qualifies buyers and runs a structured process.

If you need financing, use a mortgage or debt advisory agreement. It sets whether the broker represents you or the lender. It discloses fees and any lender-paid compensation. It defines the fee as a percentage of funds advanced. It sets when the fee is payable, usually on closing.

If you need insurance placement, use a broker of record letter with terms. It authorizes the broker to act for you. It sets how the broker gets paid, and any service fees. It documents your consent for data sharing with insurers.

If you ship goods and need carriers, use a freight brokerage agreement. It sets rates, liability, and service standards. It covers claims handling and risk allocation. It clarifies who pays carrier charges and when.

If you need a one-off introduction, use a finders agreement. It sets a small success fee for a single deal. It limits the broker’s authority to avoid unintended commitments.

In each case, the agreement fits the project size and risk. Short-term, non-exclusive engagements suit wider testing. Exclusive mandates suit focused, deep efforts. Use exclusivity when you want a full marketing push. Use non-exclusive when you want options. Always set a clear term and clear fee triggers.

Legal Characteristics of the Broker Agreement

A Broker Agreement is a legally binding contract under law. It binds each party once both sign, and there is consideration. Consideration is the exchange of services and fees. Clear terms create certainty. The agreement outlines duties, fees, and timelines. This clarity supports enforceability.

What ensures enforceability? The agreement should be in writing and signed by authorized parties. It should identify the subject matter and scope. It should state the commission structure and the trigger event. It should set the term and any holdover period. It should include representations about licensing and authority. It should address disclosure and consent for conflicts. It should capture privacy consent where needed.

In some industries, a written agreement is vital to claim commission. Brokers often cannot enforce fees without a signed contract. Real estate and mortgage work requires written representation terms and disclosures. The broker should have proper licensing. Fees tied to a deal should match the scope in the contract. Courts look for a clear link between the broker’s services and the fee trigger. The clearer the trigger, the safer the fee.

Payment terms affect enforceability. State when the fee is due and who pays it. In real estate, the commission is often paid from sale proceeds. In leasing, the commission is often based on total rent. In financing, the fee is based on funds advanced. In insurance, the commission is usually paid by the insurer and disclosed to you. Your agreement should reflect the norms for your case. It should also specify if HST applies to fees.

General legal considerations include conflicts of interest and dual representation. If your broker may act for both sides, you must consent. The agreement should explain the risks and limits. It should also set confidentiality rules. You will share sensitive information with your broker. Protect it in the contract. Exclude information that is public or later becomes public.

Licensing and compliance matter. The broker should confirm they hold required licences. They should agree to follow applicable regulations. They should hold errors and omissions insurance where expected in the industry. You should confirm the broker’s identity and authority to sign.

Intellectual property may arise in marketing or reports. The agreement should set who owns materials created in the mandate. Often, you own your data and the work product. The broker owns its templates and tools. Define both to avoid doubt.

Limitations of liability are common. Many brokers exclude consequential damages. Some cap liability to a multiple of fees. You can negotiate these. Consider the risk and the insurance in place.

Termination rights protect you if things change. You can include termination for cause and for convenience. Note that many agreements preserve the broker’s right to fees on deals in progress. They also protect introductions during a holdover period. Read those sections carefully.

Privacy compliance is important. Ensure consent for the broker to collect, use, and disclose your information. The agreement should explain purposes, retention, and safeguards. This is key if the broker will share your data with third parties.

How to Fill Out a Broker Agreement

Use these steps to complete the form accurately. Tailor each section to your engagement. Keep sentences clear and terms defined.

1) Title and parties

• Insert the agreement title: “Broker Agreement.”
• Enter the date the agreement takes effect.
• Insert your legal name and address as the client. Use your full corporate name if incorporated. Include your corporation number if you want.
• Insert the broker’s full legal name and address. If the broker is a brokerage, use the corporate name. Add the licensing number where relevant.
• Identify authorized signatories for each party. State their titles.

2) Recitals or background

• Briefly describe the purpose. Example: “You wish to sell the property. The Broker will market and negotiate a sale.”
• Keep it factual and short. This sets context, not obligations.

3) Definitions

• Define key terms you use more than once. Common terms include “Transaction,” “Purchase Price,” “Lease,” “Introduced Party,” and “Confidential Information.”
• Define the “Success Fee” and “Closing” to match your deal.
• For leasing, define “Base Rent,” “Additional Rent,” and “Lease Term.”
• For financing, define “Committed Amount” and “Funded Amount.”

4) Scope of services

• Describe what the broker will do. Tailor by industry.
• For a sale mandate: marketing, listing, showings, data room, offers, negotiation, and closing support.
• For a tenant search: needs analysis, tours, RFPs, comparing proposals, and advise on lease terms.
• For a business sale: buyer research, teaser, confidential information memo, NDAs, bids, and diligence coordination.
• For financing: packaging, lender outreach, term sheet negotiation, and closing.
• For insurance: coverage review, quote solicitation, bind and issue policies, and claims support.
• State what the broker will not do. For example, “The Broker does not give legal or tax advice.”

5) Exclusivity and territory

• Decide if the engagement is exclusive or non-exclusive.
• Exclusive means you cannot hire others for the same scope during the term.
• Non-exclusive allows others. Expect a lower level of spend from the broker.
• Define the territory or market segment if needed.
• For tenant or buyer rep, state whether you may pursue off-market deals without the broker.

6) Term and termination

• Set a start date and an end date. Choose a term that matches your cycle.
• Add a renewal option if both parties agree in writing.
• Include termination for cause if the other party breaches.
• Include termination for convenience with notice, such as 10–30 days.
• State what happens on termination. Clarify fees for in-progress deals and introduced parties.

7) Fee structure and payment

• Choose a fee model:
• Percentage of sale price or lease value.
• Flat fee or retainer plus success fee.
• Hourly rates for defined advisory tasks.
• For financing, a percentage of funds advanced.
• Explain when the fee is earned and due. Tie it to a clear event. Examples:
• Sale: “Fee is due on closing when title transfers.”
• Lease: “Fee is due on lease execution.”
• Financing: “Fee is due when funds are advanced.”
• If fees can include a minimum, state the minimum.
• State responsibility for HST. Example: “Fees are subject to HST.”
• Address who pays the fee. In real estate, the seller or landlord often pays. In some cases, you may pay your broker directly.
• For leasing, state how you calculate commission. Example: “X% of aggregate base rent over the initial term.”
• Include a sample calculation. Example: “If rent is $50,000 per year for five years, commission at 4% equals $10,000, plus HST.”
• Explain any retainer. State if it is non-refundable and whether it offsets the success fee.
• Address reimbursable expenses, such as marketing or travel. Require pre-approval over a set amount.

8) Protection period (holdover)

• Add a holdover period, often 90–180 days. It protects the broker for deals with parties they introduced.
• Define “Introduced” as parties the broker contacted during the term. Require a written list within a set time after expiry.
• Allow exceptions for parties you were already negotiating with. Use a disclosure schedule to list them.

9) Dual or multiple representation and conflicts

• For real estate, address consent for the broker acting for both sides if allowed. Explain the limits on advice in that case.
• For other industries, include a conflicts clause. The broker must disclose conflicts and get your consent.
• You can prohibit dual representation if you prefer.

10) Client responsibilities

• Promise to provide accurate, complete information. The broker will rely on it.
• Agree to cooperate on scheduling, access, and document delivery.
• Assign a primary contact on your side for decisions.
• Agree to maintain insurance or compliance if relevant to showings or site visits.

11) Broker representations and compliance

• The broker confirms it holds required licences.
• The broker agrees to comply with applicable laws and industry rules.
• The broker confirms it has authority to sign and perform.
• The broker confirms it carries errors and omissions insurance if customary.

12) Confidentiality and privacy

• Define what information is confidential. Include business plans, financials, and personal data.
• Allow standard exceptions, such as information that is public or lawfully obtained.
• Set who can receive the information, such as potential buyers or lenders, under confidentiality terms.
• Require safeguards and a duty to notify in case of a breach.
• Address personal information. State purposes and obtain consent for collection and disclosure.

13) Marketing and sign authority

• State whether the broker may advertise the listing and place signs.
• Set who approves marketing materials.
• For business sales, require NDAs before sharing detailed information.

14) Non-circumvention and non-solicitation

• Include a non-circumvention clause. You agree not to bypass the broker to avoid fees with introduced parties.
• Consider a non-solicitation clause for the broker’s employees for a limited period.

15) Limitation of liability and indemnity

• Add a reasonable liability cap. Many choose the amount of fees paid.
• Exclude indirect or consequential damages.
• Include an indemnity if your information is inaccurate and causes claims.
• The broker should indemnify you for regulatory breaches or IP misuse.

16) Insurance and risk allocation (sector-specific)

• For freight, state cargo liability and claims process.
• For property showings, address safety rules and site access.
• For insurance brokerage, clarify the broker’s role as your agent or as intermediary.

17) Governing law and dispute resolution

• Choose applicable law and related courts.
• Add a negotiation step before litigation. You may add mediation.
• Set timelines for notice and response.

18) Notices

• Provide addresses for notice. Include email for routine notices.
• State that notices are effective upon delivery or a set time after sending.

19) Assignment and subcontracting

• Restrict assignment without consent. Allow assignment to a successor on a sale of business.
• Permit the broker to use sub-brokers with your consent. The broker remains responsible.

20) Entire agreement and amendments

• State that the contract is the whole agreement between you and the broker.
• Require written amendments signed by both parties.

21) Schedules and attachments

• Schedule A: Property, business, or mandate description. Include address, legal description, or asset list.
• Schedule B: Fee schedule and commission examples. Include tiered rates if any.
• Schedule C: List of excluded parties or existing negotiations.
• Schedule D: Marketing plan or service plan.
• Schedule E: Privacy consent and any conflict disclosures.
• Attach any NDA you require for prospective counterparties.

22) Signatures

• Sign and date the agreement. Print names and titles.
• If signing for a corporation, include your office. Confirm you have authority to bind the company.
• Electronic signatures are acceptable if both parties agree.
• Keep a fully signed copy. Share it with your legal and accounting teams.

Final checks before you sign:

• Ensure names and addresses are correct.
• Confirm the fee math with examples.
• Check the HST clause.
• Confirm the term, exclusivity, and holdover align with your plan.
• Review conflict and dual representation clauses. Make sure you are comfortable.
• Confirm confidentiality and privacy language meets your needs.
• Verify schedules are attached and complete.
• Confirm signature blocks match the legal names.

Once signed, follow the process you set. Give the broker the information they need. Keep records of introductions and offers. Ask for regular updates and a clear activity report. If you decide to end the mandate, give notice as required. Address any in-progress deals and fee obligations. This approach keeps expectations clear and reduces risk.

Legal Terms You Might Encounter

Broker and Principal describe the parties. The broker performs services to source or close deals. The principal is the company receiving those services. Your form should name each party’s full legal name and role.

Exclusive and Non‑exclusive define control. Exclusive means you are the only broker for the defined scope or territory. Non‑exclusive lets the principal use other brokers. Your choice changes how commission, conflicts, and effort align.

Territory sets the geographic area you cover. It can be specific cities, or named accounts. The form should list it clearly to avoid overlap with other brokers.

Term and Renewal state how long the agreement lasts and how it renews. Many forms use a 12‑month term with automatic renewal unless someone gives notice. Your dates should match your sales cycle and targets.

Commission and When Earned explain your pay and the trigger. “Earned on signing” means you earn commission when the client signs. “Earned on closing” means payment after conditions are met and funds change hands. The form must state the trigger, timing, and rate.

Gross Revenue and Net Revenue affect your commission base. Gross revenue uses the full invoice amount. Net revenue may exclude taxes, refunds, shipping, or discounts. Your agreement should state inclusions and exclusions in plain words.

Lead Registration and Protected Period cover ownership of opportunities. Lead registration requires you to submit a prospect for approval. A protected period preserves your commission if the deal closes later. Your form should set the registration method, approval time, and the protection window.

Expenses and Reimbursement govern cost recovery. Pre‑approved expenses are reimbursable with receipts. A cap protects both sides. Your agreement should name the cap, approval process, and payment timing.

Confidential Information and Non‑circumvention protect sensitive data and your work. Confidentiality bars disclosure or misuse of shared information. Non‑circumvention prevents the principal from sidestepping you on your registered leads. The form should define what is confidential and for how long.

Termination for Cause and Convenience explain exit rights. “For cause” includes breach, fraud, or licensing issues. “For convenience” allows either side to end on notice. Your form should set notice periods, cure rights, and the impact on unpaid commission.

Governing Law and Dispute Resolution set the rules and forum. Governing law names the province’s law that applies. Dispute resolution can require negotiation, mediation, or court. Your form should list governing law if that matches your operations and risk tolerance.

Assignment and Sub‑brokers control who can perform or benefit from the agreement. Assignment transfers rights to another party. Sub‑brokers are third parties you engage. Your form should say if assignment needs consent and whether sub‑brokers are allowed.

Independent Contractor and Taxes confirm status and tax handling. You are not an employee. You handle your own taxes. If you charge HST, the agreement should state that commissions are subject to applicable taxes.

Indemnity and Limitation of Liability shift and limit risk. Indemnity means you cover the other party’s losses in defined cases. A liability cap limits damages to a set amount. Your form should address both in a balanced way.

FAQs

Do you need exclusivity to make this work?

Not always. Exclusivity can increase focus and support, but limits your flexibility. If you accept exclusivity, set clear performance metrics and termination rights. If you reject exclusivity, define territory and accounts to avoid channel conflict. Either way, protect your lead registration and commission triggers.

Do you earn commission if the deal closes after termination?

It depends on your tail period. If you registered and actively worked a lead, a tail period preserves your commission for late closings. Standard tails range from 3 to 12 months. Your form should set the tail length and the proof you must keep. Keep email approvals and activity logs.

Do you need to reimburse broker expenses?

That is optional. If the principal wants the broker to travel or market, include a budget and approval rules. Set a monthly cap and require pre‑approval for big items. Define what counts as reimbursable and the receipt format. Name the payment timeline.

Do you allow sub‑brokers or referral partners?

Only if the agreement permits it. You can allow sub‑brokers with written consent and confidentiality obligations. If permitted, define who pays whom and who owns the client. Require proof of insurance where appropriate. Keep clear records to avoid double claims.

Do you get paid if the principal closes the deal without you?

Yes, if the lead is properly registered and within your protection terms. Your agreement should say commission is owed when a registered prospect signs within the protection window. Include carve‑outs for existing accounts if required. Keep lead approvals and time stamps.

Do you need insurance to act as a broker?

Some principals require insurance. Common requests include professional liability and general liability. If required, attach a certificate and list limits in the form. Set a reasonable deadline to provide updates on renewal.

Do you need a licence to broker?

Some industries require licensing or registration. Examples include real estate and certain financial products. If your work falls under a regulated area, confirm eligibility before signing. Your agreement should require compliance with applicable laws and permit termination for violations.

Checklist: Before, During, and After

Before signing

• Confirm each party’s exact legal name, form, and address.
• Gather contact details for notices and billing.
• List your HST registration number if you charge HST.
• Define products, services, or deals covered.
• Map the territory or named accounts with no overlap.
• Decide exclusivity or non‑exclusivity and carve‑outs.
• Set the term, renewal, and termination notice period.
• Choose commission rates, tiers, and minimums.
• Decide the commission trigger and payment timing.
• Define “gross” or “net” revenue, with inclusions and exclusions.
• Add a tail period for post‑termination closings.
• Set a lead registration process and approval timeline.
• Decide on expense reimbursement, caps, and approvals.
• Confirm confidentiality and non‑circumvention terms.
• Review compliance and licensing requirements for your sector.
• Determine whether sub‑brokers are allowed and on what terms.
• Select governing law and dispute resolution steps.
• Align indemnity, liability caps, and exclusions from the cap.
• Check insurance requirements and proof deadlines.
• Prepare required schedules: rate table, territory, account list.

During signing

• Verify the commission table and math in each schedule.
• Confirm all blank fields are filled or marked “not applicable.”
• Check dates for the effective date, term, and notice periods.
• Ensure exclusivity and carve‑outs match your understanding.
• Confirm the commission trigger and tail period language.
• Review “net revenue” deductions to avoid hidden reductions.
• Validate the lead registration method and response time.
• Confirm expense caps, receipt rules, and payment timing.
• Check assignment and sub‑broker consent requirements.
• Verify confidentiality scope and survival period.
• Confirm the governing law if that is intended.
• Review termination for convenience and cure periods.
• Ensure the liability cap and indemnities are balanced.
• Verify invoice details, tax treatment, and currency.
• Confirm signature authority for each signer.
• Initial each page or schedule if the form requires it.
• Attach all exhibits: territory map, pricing, forms, approvals.
• Add the notice addresses and email for formal notices.
• Agree on operational contacts for daily coordination.

After signing

• Save a fully signed PDF with all schedules.
• Share the agreement with sales, finance, and legal contacts.
• Set calendar reminders for renewal and notice deadlines.
• Configure your CRM with territory, accounts, and lead rules.
• Implement the lead registration workflow and approval SLA.
• Create an invoice template with commission and HST fields.
• Set up a commission tracker tied to closed deals and payments.
• Store the agreement in a secure, searchable system.
• Collect any required insurance certificates and diarize renewals.
• Train your team on exclusivity, approvals, and expense policies.
• Monitor compliance and resolve conflicts quickly.
• Review performance quarterly and adjust by written amendment if needed.

Common Mistakes to Avoid

Leaving commission triggers vague. If “earned” is unclear, payment disputes follow. Don’t forget to state the exact trigger, the timing, and the proof required.

Ignoring HST language. If tax treatment is missing, invoices get delayed. Don’t forget to state whether amounts are plus applicable taxes and list HST numbers.

Skipping lead registration rules. Without a process, two brokers may claim the same deal. Don’t forget to define submission, approval time, and protection period.

Using the wrong legal names. Payment and enforcement can fail if names are incorrect. Don’t forget to use full legal names, not trade names, and add addresses.

Overlooking “net revenue” deductions. Hidden deductions shrink commissions. Don’t forget to list deductions allowed and exclude items like taxes and rebates if intended.

Allowing sub‑brokers without controls. You may face double claims and poor quality. Don’t forget to require consent, flow‑down obligations, and payment clarity.

Weak termination and tail terms. You may lose rights on late closings. Don’t forget to include a fair tail period and a clear cure process.

What to Do After Filling Out the Form

Circulate the executed agreement to all internal stakeholders. Send it to sales, finance, and operations. Highlight key terms like exclusivity, territory, commission, and tail period.

Load the deal terms into your systems. Update your CRM with territory, accounts, and lead registration steps. Enter commission rates and triggers in your commission tool or tracker. Add the notice addresses and escalation contacts.

Stand up your lead registration process. Publish the submission format and approval timeline. Create a shared log with timestamps, approvals, and statuses. Train your team to check for conflicts before outreach.

Align your invoicing and tax setup. Build an invoice template that itemizes commission and applicable HST. Add legal names, addresses, and HST numbers. Set payment reminders based on the due date in the agreement.

Confirm compliance items. Gather required insurance certificates and diarize renewal dates. Review any industry licensing conditions that apply to your work. Keep copies with the contract.

Plan your reporting cadence. Agree on monthly or quarterly pipeline and closed business reports. Include lead status, expected close dates, and commission forecasts. Use the report to confirm commissions and reduce disputes.

Schedule performance and contract reviews. Set quarterly check‑ins to assess targets, territory, and support. Use a simple agenda with metrics and next steps. If changes are needed, prepare a short written amendment and circulate for signature.

Create a dispute resolution path. List contacts for operational issues and for escalations. Outline steps for negotiation and mediation if the agreement requires it. Record outcomes in writing.

Prepare your exit and renewal calendar. Track the renewal date and the notice period. Add a task to review results well before notice is due. If you plan to terminate or renegotiate, draft and send the required notice on time.

Maintain a clean record. Store the signed agreement, amendments, approvals, and correspondence. Keep lead logs, invoices, and commission statements. Organized records protect your rights under the tail period and beyond.