How and when is a real estate agent's commission actually paid in Ontario?

In Ontario, real estate commissions are paid on closing day out of the sale proceeds. The seller's lawyer receives the purchase funds from the buyer's lawyer, deducts the commission from the trust account, and sends the commission amount (including HST) directly to the listing brokerage. The listing brokerage then splits the commission with the buyer's brokerage according to the co-operation agreement they have in place.

You do not write a cheque to your agent before or during the sale process. The obligation to pay arises from the listing agreement you signed with the brokerage, not with the individual agent. The agent is paid by their brokerage after the brokerage receives its share.

If the deal falls apart before closing — for example, because of a failed condition — no commission is generally owed unless your listing agreement has specific language about commission earned on a failed transaction (some agreements include such clauses for situations where a buyer is found but the seller refuses to close). Read your listing agreement carefully and ask your lawyer to review it before signing.