Broker Fees Are Back in NY After Upstate Judge Issues Restraining Order

An upstate granted a temporary restraining order Monday against a rule that would have barred the oftentimes-costly expense from being passed onto prospective tenants

Brooklyn brownstones
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Postpone the celebration — broker fees aren't going anywhere for the time being.

That's because an upstate judge granted a temporary restraining order Monday afternoon against a New York Department of State guideline that would have barred the oftentimes-costly expense from being passed onto prospective tenants.

Under the the department's new rules, which were circulated last week, landlords would have been paying the fees if they had hired an agent to show the listing. In many areas of New York City, broker fees can sometimes either equate to one month’s rent or 15 percent of the yearly rent total.

While the fees would have been paid by the landlord had they hired the broker, any apartment hunter who hired a broker directly still would have had to fees fall to them.

The temporary postponement comes after many in the real estate business, including realtors, brokers and brokerage firms, argued that the new rules would cause an uproar in the industry — and eventually lead to a big loss of jobs.

Many well-known NYC brokerage firms were named in the petition, filed by the Real Estate Board of New York, including Bohemia Realty Group, Bond New York Real Estate Corp., the Corcoran Group, Douglas Elliman Realty Estate, Halstead Real Estate, Sotheby's International Realty, Inc and City Connections Realty, Inc.

According to new statewide regulations, broker fees will now be prohibited from being passed onto prospective tenants. Ida Siegal reports.

The regulations applied to units across the state, but impacted the city most prominently, where broker fees would sometimes prevent would-be tenants from applying as up-front costs would be too high to afford.

Other regulations outlined in the Statewide Housing Security & Tenant Protection Act and the Housing Stability & Tenant Protection Act, both of which were passed in 2019, included:

  • Landlords prohibited from collecting application fees greater than $20 unless otherwise provided for by law or regulation
  • Application fees waived if a background or credit check provided by the potential tenant was conducted in the past 30 days.
  • Landlords restricted from charging late rent fees “unless the payment of rent has not been made within five days of the date it was due,” and penalties cannot be more than $50 or five percent of the monthly rent, whichever is less
  • Deposits must be returned within two weeks after the tenant has left the apartment
  • No deposit or advance for a unit can be more than one month’s rent, and landlord cannot request additional security deposit for pets or move-in expenses

New York’s Department of State released further guidance on the acts in paperwork dated January 31, 2020. It did not appear that the other regulations were under the same restraining order as the broker fee postponement.

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