The Real Estate Board of New York (REBNY), a lobby group representing New York City brokerages and landlords, has filed a lawsuit in federal court to block a new law that would end the local practice of tenants paying upfront broker fees to agents who list apartments on behalf of landlords.
The legislation, dubbed the Fairness in Apartment Rental Expenses (FARE) Act, requires landlords to pay the fee when they hire a real estate broker to market their properties. The new legislation also includes when a broker publishes a listing with the landlord’s permission. If a tenant is required to pay fees, the amount needs to be disclosed in both the listing and rental agreements. Landlords who violate the new rules can face penalties.
Previously, New Yorkers were required to pay 15% of their annual rent on broker fees. The legislation passed in a 42-8 vote, and The Gothamist reports the law went into effect on Friday after Mayor Eric Adams declined to sign or veto.
REBNY’s General Counsel Carl Hum criticized the FARE Act by claiming it “infringes upon constitutional guarantees of free speech and contract rights” because it prevents brokers from posting apartments on online listings platforms without being contracted by a landlord to make the postings. The lawsuit also stated the new law would void long-standing contracts between landlords and brokerage firms that give brokers the right to charge the fees to tenants.
An earlier attempt to shift the fee payments from New York City tenants to landlords occurred in 2020 in a directive from New York’s Department of State. At that time, REBNY succeeded in reversing the directive.
Councilmember Chi Ossé of Brooklyn, who sponsored the broker fee legislation, said the law was designed to help working-class New Yorkers.
“This lawsuit is a last desperate attempt by the real estate lobby to undermine the voices of city residents and maintain an irrational practice that nearly every other big city in the country does not allow,” said Ossé in a written statement.
If the REBNY lawsuit fails, the law will go into effect in June 2025.
;
