Today the New York City Council passed significant legislation reforming how broker fees can be charged and disclosed in residential real estate leases. The legislation now awaits the Mayor’s signature, and if signed would become effective 180 days after enacted.
As you may already be aware, residential leasing in New York State and New York City has become increasingly complex. In 2019, New York State passed the Housing Stability and Tenant Protection Act and in 2024 New York State passed Good Cause Eviction. A summary of the changes to the law can be found on our blog by clicking HERE. The legislation passed by the city council is INT 360-2024 and is commonly known as the FARE Act. Text of the legislation can be found HERE. A summary of the legislation can be found below.
Key Provisions
New Broker Fee Restrictions
• Landlord’s agents will be prohibited from charging or collecting fees from tenants
• Landlords will be liable for violations by their agents
• Properties cannot be conditioned on a tenant engaging any agent, including dual agents (i.e. conditioning that a tenant use the landlord’s broker in order to rent a unit)
New Fee Disclosure Requirements
• All rental listings must clearly disclose any tenant-paid fees
• Landlords or their agents must provide itemized written disclosure of all fees before lease execution
• Tenants must sign the fee disclosure before signing the lease
• Signed disclosures must be retained for 3 years
Enforcement Structure
Civil Penalties
• Penalties for violations for charging a tenant a brokerage commission are up to $1,000 for first violation and up to $2,000 for subsequent violations within 2 years
• Penalties for failure to disclose tenant fees are up to $500 for first violation and up to $1,000 for subsequent violations within 2 years
• The legislation also establishes a private right of action allowing affected individuals to bring civil actions seeking compensatory, injunctive, and declaratory relief
We will continue to monitor this legislation through mayoral review.
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.