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American Focus > Blog > World News > NYC broker fee law — which protects tenants from costs — challenged by real estate agents in 11th-hour push
World News

NYC broker fee law — which protects tenants from costs — challenged by real estate agents in 11th-hour push

Last updated: May 30, 2025 2:18 pm
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NYC broker fee law — which protects tenants from costs — challenged by real estate agents in 11th-hour push
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Contents
What is the Fairness in Apartment Rental Expenses (FARE) Act?When do broker fees go away?Does this mean that all broker fees are illegal?What are real estate agents saying?

Real estate agents are racing against time to negotiate a deal.

Before a new law shifting the burden of costly broker fees away from renters takes effect next month, New York City’s real estate industry is making a last-minute attempt to stop it.

The Real Estate Board of New York, a group of over 10,000 real estate professionals, filed a motion seeking to pause the Fairness in Apartment Rental Expenses Act until the court battle over the law is resolved.

Here’s a breakdown of the new rules set to launch on June 11, unless a federal judge grants REBNY’s motion.

New York City’s real estate industry is making an 11th-hour bid to halt the new broker fee ban before it takes effect next month. BullRun – stock.adobe.com

What is the Fairness in Apartment Rental Expenses (FARE) Act?

The FARE Act, passed in City Council with a veto-proof majority of 42-8 on Nov. 13, prohibits agents representing property owners from charging prospective renters a “broker fee.” It also mandates that all fees a tenant owes be included in rental agreements and real estate listings.

Supporters of the legislation argue that it will help alleviate the city’s housing crisis by reducing upfront costs for tenants, including broker fees, which typically account for about 15% of the annual rental unit cost, according to real estate website OpenIgloo.

However, critics of the law suggest that landlords may still pass on broker fees to tenants through higher monthly rents.

Andrew Lieb, managing attorney of boutique real estate litigation law firm Lieb at Law, believes that the FARE Act will significantly alter the Big Apple rental market.

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“It will result in tenants losing access to housing from landlords who simply decide it’s not worth it to be a landlord anymore,” Lieb told The Post. “New York City is really making it impossible for a residential landlord to operate given the plethora of red tape that needs to be navigated just to sign a lease — and then enforcing that lease is a whole other disaster.”

When do broker fees go away?

Unless a federal judge rules otherwise, landlords will be prohibited from passing on the fee to a tenant after June 11, even if a lease was signed before the effective date, a representative from the Department of Consumer Protection confirmed to The Post.

New York City is one of the few cities where landlords can hire a broker and transfer the agent’s fee to a tenant.

The Real Estate Board of NY (REBNY) has taken the measure to file an 11th hour push in federal court to stop the city’s new Fairness in Apartment Rental Expenses (FARE) Act from going into effect. rebny.com

New York landlord-tenant lawyer Altagracia B. Pierre Outerbridge expects the mandate to go into effect, and that a federal judge is “probably not going to block the law” since the court hasn’t yet issued a decision.

“The fact that a month has passed (and the law is going into effect in two weeks) without the Court doing anything suggests that it doesn’t feel a huge rush to get involved,” Pierre Outerbridge told The Post.

Does this mean that all broker fees are illegal?

Landlords and tenants can still hire their own brokers under the FARE Act.

But landlords can’t shift the cost of a broker that is “exclusively representing the landlord’s interests” onto a tenant. This includes fees for brokers who publish listings with the landlord’s permission.

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“The FARE Act ensures transparency for tenants to not unfairly be burdened with additional costs by placing the responsibility for a broker’s fees on the party that actually hired them,” the City Council said in a statement.

What are real estate agents saying?

In the lawsuit filed in December, REBNY attorneys claimed the city’s “profoundly misguided” legislation violated federal and state laws, including constitutional free speech and contract rights.

“The FARE Act is constitutionally flawed on multiple accounts. We are confident that the Courts will agree with us,” a REBNY rep told The Post.

The New York State Association of Realtors further argues the law would drive up rental costs, strip away “over half” of online rental listings and open the “floodgates for baseless lawsuits and penalties against brokers.”

Last year, the FARE Act was passed in the City Council, which will prohibit agents representing property owners from charging prospective renters a “broker fee.” J.C. Rice

“The landlords who still want to use a broker and are allowed to raise the rent to accommodate the shift in responsibility will do so,” Pierre Outerbridge said, adding that some tenants are “going to be shocked to pay an extra month’s rent in broker fees in order to sign their lease.”

“It will exacerbate rental unaffordability,” Violetta Weddepohl, a broker at Serhant, concurred. “As a result, when leases come up for renewal in a year or two, tenants will face even steeper rent increases. 

“I have sympathy for the argument that the broker should be paid by the person who hires them,” she said, “but the reality is that the landlords can get away with charging higher rent.”

However, real estate listing website Streeteasy estimated that the average cost to sign a lease on rentals that would have currently charged a broker fee will fall by 41.8% once the law takes effect.

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“Rental properties that stopped charging tenants a broker fee in the past did not increase rents beyond broader market trends,” reads a December report from the site. The high upfront costs create a lock-in effect that allows landlords to increase rents more quickly.

TAGGED:11thhouragentsbrokerchallengedCostsestatefeelawNYCprotectspushrealTenants
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