The TXR-2402 Compensation Agreement Between Brokers is the Texas REALTORS® form a listing broker and a cooperating broker use to put commission terms in writing before closing. Since the August 2024 NAR settlement barred MLS platforms from displaying offers of compensation, this written side agreement has become the standard way a listing broker formally commits to paying a buyer’s broker fee. Fill it out with each firm’s legal name and TREC license number, the property’s address and legal description, and the exact fee both sides negotiated, then have both brokers sign and exchange copies.
When You Need the Form
Before August 17, 2024, listing brokers routinely offered compensation to buyer’s brokers directly through the MLS. New rules ended that practice: the MLS can no longer accept listings containing an offer of compensation to other participants. Sellers can still pay a buyer’s broker, but the offer now happens outside the MLS.
Two situations call for the TXR-2402. The first is a standard listed sale where the seller has checked the box in Paragraph 5A of the Residential Real Estate Listing Agreement (TXR 1101) authorizing compensation to a cooperating broker. Once that authorization exists, the listing broker and buyer’s broker complete a TXR-2402 to formalize what will actually be paid, and a reference to the agreement can be noted in the Disclosure Paragraph on the Broker Information page of the TREC sales contract.1Texas Realtor. Which Form Should I Use?
The second is any deal without a listing on the MLS: pocket listings, for-sale-by-owner properties where the seller has agreed to pay a buyer’s broker, or commercial transactions handled outside MLS channels. Wherever no other written record establishes what the cooperating broker earns, the TXR-2402 creates it.
How to Get a Copy
The TXR-2402 is a proprietary Texas REALTORS® form, not a TREC-promulgated contract. Only Texas REALTORS® members can access it. Membership includes more than 100 forms and addenda that cover transactions TREC forms don’t, and the association updates them regularly.2Texas REALTORS. Member Guide Members download it through the Legal Tools section of texasrealestate.com. Non-members won’t find a blank copy on any public site; you’ll need a broker who has access, or a custom compensation agreement drafted by an attorney.
Information to Gather Before You Draft
Get these details in hand before opening the form. Tracking them down mid-drafting slows both sides and invites errors that could complicate a commission claim later.
- Full legal name of each brokerage exactly as it appears on the broker’s TREC license, not a DBA, team name, or marketing brand.
- Each brokerage’s TREC license number. Verify status and number through TREC’s online License Holder Search at trec.texas.gov.3TREC. License Holder Search
- Office address, phone, and email for both firms.
- Street address and legal description of the property (lot and block from a recorded plat, or metes-and-bounds for rural parcels).
- The specific fee both sides agreed on, expressed as either a percentage of sales price or a flat dollar amount, and whether it covers a sale, a lease, or both.
- If the agreement covers a specific buyer, that buyer’s name. If it’s open-ended for any buyer the cooperating broker brings, the termination date for the offer.
Verifying the license numbers isn’t just a formality. TREC’s search shows whether a license is active, inactive, expired, suspended, or revoked. Entering an agreement with an unlicensed or suspended brokerage creates an unenforceable payment promise and regulatory exposure for the paying broker.
Filling Out the TXR-2402
The form is short, usually one to two pages, and moves in a logical sequence: parties, property, amount, triggering conditions.
Enter the full legal brokerage names and contact details for the listing broker and the cooperating broker in the parties section. Use the names from the TREC licenses, not informal references. Then identify the property by street address and legal description. Getting the legal description right matters. If a dispute arises, ambiguity about which property the agreement covers is the fastest way to lose a commission claim.
The compensation section is the heart of the form. Enter the agreed amount, either a percentage of the final sales price or a flat dollar figure. The form includes options to specify when the fee is earned. The standard trigger is a successful closing and funding of the transaction. If the deal is a lease rather than a sale, select the option that ties the fee to lease execution instead of deed transfer. The form is built around a procuring-cause standard, meaning it protects the cooperating broker’s commission when that broker’s efforts led to the successful transaction.4Texas National Title. Understanding TAR Forms and Changes Chart
Double-check that the number on the form matches what was verbally negotiated. A mismatch between the written figure and one side’s memory is the most common source of post-closing disputes between brokerages. If the agreement is limited to a time window or a named buyer, fill in those restrictions. Leaving them blank could create an open-ended obligation the listing broker never intended.
The Commission Rate Is Negotiated, Not Standard
Federal antitrust law sets a hard boundary on how commission rates get set. The Sherman Antitrust Act prohibits competing brokerages from agreeing, formally or informally, to charge a standard rate. Even a casual conversation between competitors about “going rates” can be treated as an invitation to fix prices. No real estate board, MLS, or professional association has authority to establish standard commission rates or splits.
For the TXR-2402, this means the compensation amount is always negotiated between the two brokerages in that specific deal. Neither side should reference an industry “standard” when filling in the compensation field. Each firm sets its own rates independently. The NAR settlement reinforced this by requiring conspicuous disclosure in listing and buyer agreements that broker compensation is fully negotiable and not set by law.5National Association of REALTORS. Summary of 2024 MLS Changes
Signing and Delivering
Both the listing broker and the cooperating broker, or an authorized representative from each firm, must sign. A sales agent can sign on behalf of a brokerage if the broker has granted that authority, but the agent signs in the firm’s name, not their own. Date every signature so the start of the obligation is on record.
Electronic signatures are legally valid. Texas adopted the Uniform Electronic Transactions Act under Texas Business and Commerce Code Chapter 322, which gives electronic signatures the same legal weight as ink on paper. DocuSign, Dotloop, and similar platforms in common use across Texas real estate practice work fine, provided each signer shows intent to sign and the system retains an accessible record.
Once both sides have signed, the initiating broker should immediately deliver a fully executed copy to the other firm. Don’t let this slide. A signed agreement that only one party possesses is an invitation to a “we never agreed to that” conversation at the closing table.
Keeping the Record
TREC rules require brokers to keep commission agreements for at least four years from the date of closing, contract termination, or the end of the transaction. The retention rule covers listing agreements, buyer representation agreements, and “other written agreements relied upon to claim compensation,” which squarely includes the TXR-2402.6Cornell Law Institute. 22 Texas Administrative Code 535.2 – Broker Responsibility
Records must be in a format “readily available to the Commission,” so TREC can request them during an audit or complaint investigation. Digital storage is fine as long as you can produce the document promptly. The only exception is records destroyed by an act of God, meaning a natural disaster or fire not intentionally caused by the broker. Claiming you lost the file or changed computer systems won’t satisfy TREC.
Paying the Cooperating Broker at Closing
When the listing broker pays out at closing, that payment triggers federal tax reporting. Any payment of $600 or more to another brokerage for services must be reported to the IRS on Form 1099-NEC. Depending on how the closing is structured, the listing broker or the title company handling disbursements is responsible for filing.
Before paying, collect a completed IRS Form W-9 from the cooperating brokerage. The W-9 provides the taxpayer identification number (usually an EIN), legal name, entity type, and address, all of which you need to complete the 1099-NEC accurately. A W-9 stays valid until there’s a change in name or entity type; an address change alone doesn’t require a new one. Form 1099-NEC is due to both the IRS and the payee by January 31 of the year following payment. For a commission paid at a 2026 closing, the 1099-NEC is due by January 31, 2027.
If a Commission Dispute Arises
Commission disputes between brokerages are civil matters. TREC does not adjudicate who earned a commission or how much is owed. That’s between the firms, and ultimately a court decides if they can’t work it out. A signed TXR-2402 with clear terms is the single strongest piece of evidence in that fight. Without one, the cooperating broker is arguing from memory and email threads, a much weaker position.
When a dispute comes up, review whether the agreement’s conditions were met. Was there a successful closing? Did the cooperating broker meet the procuring-cause standard? Was the agreement still within its stated time frame? Those questions determine enforceability. Many brokerages resolve commission disputes through mediation arranged by the local REALTOR® association before turning to litigation.