Rent

Decision on New York's broker fee ban pushed off to June

If you are in the process of renting an apartment, be sure to hold onto all documents connected to your broker fee. 

Austin Havens-Bowen for Brick Underground

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The question of whether last year’s rent laws have made landlord broker fees illegal just got pushed off until June.

On Friday, New York Attorney General Letitia James asked for more time to respond to a lawsuit filed last month over the landlord broker fee ban. James Whelan, president of The Real Estate Board of New York, says that REBNY, along with some brokerage firms and the New York State Association of Realtors (NYSAR) who had filed the suit agreed to the extension.

“Attorneys for the government and the industry recognize the complexity of the issues raised in the matter and agree that additional time is necessary for preparation of court documents,” he says. 

The Attorney General now has until May 1st to respond, and the case will go back to court on June 12th.

The suit challenges an interpretation of the rent reforms that banned brokers fees when the broker is hired by a landlord—a longstanding source of pain for renters in a city where broker fees can be the equivalent of one month or up to 15 percent of the annual rent. (Tenants who hire brokers to show them multiple apartments and help them with paperwork would still be on the hook for the broker fee).

The guidance, which was issued by the Department of State on January 31st, threw the industry into turmoil, with brokers predicting a severe loss of income and that rents would rise as landlords passed on the fees to their tenants.

After the guidance came out, REBNY, NYSAR, and several brokerage firms filed suit, saying the Department of State had overstepped its authority. A New York judge granted a temporary restraining order suspending the ban.

If you are in the process of renting an apartment, be sure to hold onto all documents connected to your broker fee and stay tuned to see what the courts decide.