The FARE Act has survived its biggest legal test. On July 13, 2026, the United States Court of Appeals for the Second Circuit upheld New York City’s ban on tenant-paid broker fees in Real Estate Board of New York v. City of New York. For owners who have been waiting to see whether the law would hold up, the waiting is largely over. The court’s decision can be found HERE.
What The FARE Act Does
The FARE Act, Local Law 119 of 2024, cleared the City Council in November 2024 and became law without the mayor’s signature. Our original alert on the FARE Act can be found HERE. Since taking effect on June 11, 2025, the law has prohibited a landlord’s agent, including a listing agent publishing with the landlord’s permission, from charging fees to prospective tenants.
Landlords are also prohibited from requiring a tenant to retain a particular agent as a condition of renting, but a tenant who hires their own broker voluntarily still pays their fee. In addition, the law requires landlords to disclose every fee a tenant must pay, in both the original listing and an itemized list before the lease is signed.
The Second Circuit Court’s Decision
Within weeks of the law’s passage, an industry coalition led by the Real Estate Board of New York (REBNY) sued. The coalition argued that the law violated brokers’ commercial speech rights, unconstitutionally impaired existing brokerage agreements, and was preempted by state law. The district court dismissed those claims and declined to block the law, which the Second Circuit has confirmed.
The court agreed with the industry that the FARE Act burdens commercial speech, but found that such a limit is allowed when the rule serves a strong enough public purpose. The court took a similar position on the contracts argument by agreeing that it does impair existing broker agreements but does so permissibly because it advances a legitimate public interest in a reasonable way. The preemption argument was rejected as well. REBNY has said it will explore ways to continue its challenge, but every constitutional argument has now failed on appeal.
Practical Considerations
With the appeal resolved, Owners and managers who have not yet brought their leasing practices in line with the FARE Act should do so, and those who have should confirm their brokers are doing the same.
The foregoing is not intended to be comprehensive nor constitute legal advice. If you would like to discuss your specific circumstances or would like more information, feel free to contact us at (212) 625-8505.