What Renters Should Know As NYC’s Broker Fees Law Kicks In

With limited capacity to investigate brokers and fines for offenses relatively low, the city will depend on renters to be proactive in reporting violations of the new law. “There’s this element of vigilantism that will be able to take place here, when it comes to holding these landlords and brokers accountable,” said Councilmember Chi Ossé.

If you’re a renter sick of your shoebox apartment but too traumatized from the extra fees you paid to acquire it to search for somewhere else, today might be your day.

As the FARE Act goes into effect Wednesday, landlords can no longer stick you with the fees for real estate brokers you didn’t hire, a change estimated to save New Yorkers over 40 percent in average upfront costs to move apartments.

But with limited capacity to investigate brokers and fines for offenses relatively low, the city will depend on renters to be proactive in defending this newfound right.

“There’s this element of vigilantism that will be able to take place here, when it comes to holding these landlords and brokers accountable,” said District 36 Councilmember Chi Ossé, who introduced the bill as a tactic to give renters more leverage with their landlords. 

“Being that the forced broker fee will be eliminated, that’ll give more bargaining power to tenants when it comes to their re-lease signings because it might be cheaper for them to leave their current unit than to pay more,” he said.

If a broker asks a renter who didn’t hire them for a fee, whether it is advertised with the listing or mentioned later, they are now in violation of the FARE act. To actually eliminate these forced brokers fees, though, renters must be aware of the law and the options they have to report violations of it, which is why Ossé is seeking funds in next year’s budget to raise public awareness.

The easiest action renters can take is to file a complaint with the New York City Department of Consumer and Worker Protection (DCWP), which you can do through the consumer complaints page on the agency’s website. That involves answering basic questions about the violation, and it can be completed anonymously. Brokers found to be breaking the law will be forced to pay a maximum fine of $2,000 to the city and return fees illegally collected from tenants.

But with broker fees usually standing at one month’s rent, and the average monthly rent in New York being almost $4,000, the fine itself might not be a sufficient deterrent.

Renters can also sue individually and get an injunctive relief, in which case a judge could force a broker to stop illegally charging fees. 

And to ensure that the agent doesn’t unleash this practice on another unassuming renter, tenants can file a complaint with the New York Department of State’s Division of Licensing Services. This option can result in penalties against the broker’s license that could lead to its eventual suspension.

Outside of this, the DCWP will monitor listings to protect New Yorkers from blatant non-compliance.

“The enforcement of the FARE Act will consist of DCWP staff conducting reviews of popular online listing sites, like StreetEasy, Zillow, etc., while also relying on complaints from the public,” said a DCWP spokesperson over email.

Ossé introduced the FARE ACT in 2023 to end a practice that is not the norm in other parts of the country, and which advocates say exploited the city’s severe housing shortage. The bill failed the first time after former Councilmember Marjorie Velázquez, who chaired the Committee on Consumer and Worker Protection, declined to bring it up for a vote following an agreement with the Real Estate Board of New York (REBNY), a powerful trade group representing real estate brokers. 

But the following year, with a new committee chair, Ossé reintroduced the bill with an even bigger coalition to help push his largely social media-oriented campaign and garner widespread press coverage. Among the supporters were labor groups like the New York Central Labor Council, progressive elected officials like Comptroller Brad Lander, and real estate companies like the listing website Streeteasy.

The bill passed last November and was enacted 30 days later after Mayor Eric Adams refused to sign it, concerned about how it would impact New York’s housing market.

“Based on data, I just don’t see a monumental shift in the market for brokers and landlords,” said Kenny Lee, senior economist at Streeteasy who authored a report on the bill’s expected impact. “Renters after the FARE act will be able to understand the true cost of a rental a lot faster than the status quo, and that will make it a lot easier for property managers, as well as brokers, to connect with qualified tenants for their vacant units.”

Even with the bill going into effect Wednesday, REBNY is holding firm in its fight against it, arguing rents will soar as owners pass the cost along to tenants, and that brokers will lose their jobs. Lee’s study found that significant cost increases are unlikely, and that previous apartments that eliminated brokers fees increased rents by less than 1 percent above market trends.

REBNY filed a lawsuit alleging the FARE act violates the U.S. Constitution and New York State statutes. The state disagreed with the notion that it violates their laws, but brokers are still awaiting a decision from the court. Yesterday, a judge denied their attempt to pause the law’s implementation as the lawsuit plays out. 

“We are confident that the Court will agree with us,” said a spokesperson for REBNY.

Until that happens, the organization is warning brokers to ensure tenants don’t incur costs the law prohibits. “We strongly advise being overly inclusive concerning any landlord-imposed fees that the tenant may encounter during the tenancy,” the group said in a letter to their members.

Regardless of the ruling, the FARE act is certain to change the real estate brokerage industry. Many brokers work on non-exclusive agreements, meaning anyone with a license can list the apartment and collect their commission later from the person they rent it to. It is unclear how landlords and brokers will renegotiate this model.

The number of rentals on the market without broker fees was already increasing anyway, as many new developments handle leasing directly. The Streeteasy report found that of listings it reviewed between January and April of last year, over half of the apartments that didn’t charge fees still used agents to help them find tenants, indicating that the industry will not be completely eliminated.

“Some brokers who are very professional, who have great clients and help people find the homes they’re looking for, will stay in business,” said Ossé. “I think a lot of people who maybe have seen this business as a get rich quick scheme may have a harder time.”

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