Real Estate Groups to Challenge Ban on Broker Fees for Renters

But tenant advocates, who have cheered the fee rule, said on Friday that the state’s guidance was valid and predicted that the lawsuit would fail.

“The state issues interpretive guidance all the time on laws, and this is within their right to do that,” said Judith Goldiner, who oversees the Legal Aid Society’s civil law reform unit.

The state published the legal guidance on Tuesday night, stunning the real estate industry by saying that last year’s sweeping rent laws, which do not explicitly mention broker commissions, barred tenants from having to pay a broker’s fee.

It also surprised lawmakers in the Legislature who had approved the laws.

In New York City’s competitive rental market, tenants are often required to pay a fee, sometimes up to 15 percent of the annual rent, to a broker even if they found the apartment on their own by using websites like StreetEasy and Craigslist.

For a $2,000 per month apartment, a broker’s fee could reach $3,600, which would have to be handed over when a lease was signed.

Few cities in the United States have a similar network of brokers who collect fees from renters and control everything from listings to appointments to leases. Elsewhere, landlords either handle the marketing and leasing of units, or pay a broker to provide that service.

The Department of State said that a broker can still collect a fee but it must be paid by the landlord unless the tenant hired the broker to help find a unit.

Article source: https://www.nytimes.com/2020/02/07/nyregion/nyc-broker-fees-lawsuit.html?emc=rss&partner=rss