Maryland Licensing for Real Estate: Win Distribution Terms
TLDR: In Maryland, you must be licensed and affiliated with a broker to provide brokerage services, and compensation to salespersons is paid only through the broker. Negotiate commission splits, caps, team shares, and referral fees in clear written agreements that align with Maryland law and federal RESPA. See sources linked throughout.
Why licensing and win distribution terms go hand-in-hand
Your Maryland real estate license is the legal basis for representing clients and earning compensation. But what you actually take home depends on how commissions are distributed among your brokerage, team, and referral partners. Understanding both the regulatory framework and the economics of payout structures helps you maximize income while staying compliant with MREC rules.
Maryland license pathways and oversight
The Maryland Real Estate Commission (MREC), within the Maryland Department of Labor, regulates licensure, education, renewals, and discipline for real estate professionals in the state. For primary legal and regulatory references, see MREC’s Laws and Regulations (Title 17 BOP and COMAR) and the MREC home page.
Broker affiliation and the flow of funds
In Maryland, a real estate salesperson provides brokerage services on behalf of a licensed broker, not independently. See the statutory definition at Md. Code, Bus. Occ. & Prof. § 17-101. Compensation to a salesperson or associate broker for brokerage services is paid only through the supervising broker, as set out in § 17-322.
Practically, commissions are paid to the broker of record, who then distributes funds per your written agreement. Ensure your independent contractor or employment agreement covers:
- When commissions are earned and payable, and the timing of disbursements
- How pending transactions are handled at separation
- Broker approvals for bonuses, rebates, or concessions
- Chargebacks, deductions, E&O, technology/desk fees, and caps
Structuring win distribution terms (commission splits)
Splits vary by brokerage model. Common approaches include:
- Fixed splits: a steady percentage per transaction
- Graduated/tiered splits: improve as production increases
- Caps and fees: pay splits until a cap; monthly desk/tech fees may apply
- Team-based splits: internal distributions for leads, admin, and marketing
When negotiating, factor in:
- Lead sources and conversion support
- Marketing, technology, and transaction coordination
- Brokerage fees, E&O coverage, and supervision
- Training, mentorship, and brand value
- Post-termination payout rules for deals under contract
Quick tips to improve your split outcomes
- Tie higher splits to measurable production milestones and retention of compliance standards.
- Ask for clarity on lead types (company vs. agent generated) and differentials in splits.
- Trade a slightly lower split for concrete value: verified leads, TC support, or paid marketing.
- Negotiate written rules for payouts on deals that close after you change brokers.
Referral fees and inter-broker payments
Document referral relationships in writing and route payments through the brokers. Confirm the referring and receiving parties are appropriately licensed for the jurisdictions involved and that the arrangement complies with federal RESPA restrictions on kickbacks and unearned fees (12 U.S.C. § 2607; CFPB RESPA resources). Spell out the referral percentage, the event that triggers payment (e.g., closing), and timing and method of distribution. Maryland law also limits who may receive compensation for brokerage services; payment generally must be made through your supervising broker (§ 17-322).
Teams, assistants, and role-based allocations
Clarify roles (listing agent, buyer agent, showing assistant, coordinator) and lead ownership, credit for tiered splits, coverage for absences, and how company-generated vs. agent-generated leads are split. Unlicensed assistants may not perform activities that require a real estate license; Maryland requires a license to provide brokerage services, subject to limited exceptions (§ 17-301; see also MREC laws and regulations).
Compliance touchpoints to protect your license
- Compensation routing: Receive compensation for brokerage services only through your licensed broker (§ 17-322).
- Agency, disclosures, advertising, and supervision: Follow Maryland statutes and regulations; review MREC’s Title 17 and COMAR.
- Written agreements: Ensure your contract reflects actual economic arrangements (splits, fees, caps, referral terms).
- Updates to the Commission: Promptly process name, address, or broker affiliation changes using MREC forms/portal (MREC forms).
- Recordkeeping: Keep your commission and referral agreements with transaction files per broker policy.
Negotiation checklist for win distribution terms
- Confirm active license status and broker affiliation
- Align splits, caps, and fees with your expected volume
- Put team, lead, and referral policies in writing
- Define payout timing, especially for pending deals at separation
- Review chargebacks, expense reimbursements, E&O and tech fees
- Verify compensation terms are consistent with Maryland law and brokerage policy
Renewal, continuing education, and staying current
Rules change. Monitor MREC for updates to eligibility, education, forms, and online portals. See MREC’s renewal and CE page and the laws and regulations page. Keep CE certificates, brokerage agreements, and policy manuals organized for audits or broker reviews.
FAQ
Do I need a Maryland broker to get paid on a Maryland transaction?
Yes. A Maryland salesperson is paid for brokerage services only through the supervising Maryland broker under § 17-322.
Can an unlicensed assistant negotiate terms or show property?
No. Tasks requiring a license must be performed by licensees. Use clear role definitions and comply with § 17-301 and MREC guidance.
Are referral fees allowed with out-of-state brokers?
Generally yes, if routed broker-to-broker and compliant with Maryland law and RESPA’s anti-kickback rules.
What should a commission split agreement include?
Split percentages, caps and fees, lead-source rules, payout timing (including post-separation), and chargebacks, all aligned with Maryland law and broker policy.
When to seek legal counsel
If you’re negotiating complex team structures, unusual referral chains, or cross-state transactions, consider legal review. Counsel can align your commission terms with Maryland statutes and regulations to reduce risk of unpaid commissions, disciplinary complaints, and contract disputes.
Need help reviewing your agreement? Contact our Maryland real estate team.
Maryland-specific disclaimer: This article provides general information about Maryland real estate licensing and compensation practices and is not legal advice. Reading it does not create an attorney-client relationship. Consult a licensed Maryland attorney about your specific facts.
