With court decision delayed, broker fees live on (for now)

Posted On Mon, March 9, 2020 By

Posted On Mon, March 9, 2020 By In Policy, real estate trends

Photo courtesy of CityRealty

Real estate agents can continue to charge New York renters broker fees until at least June, Crain’s reported. Last month, the state department updated a set of guidelines for last year’s rent reform laws to prevent brokers who are hired by landlords from charging tenants a fee as part of the application process. Industry groups, including the Real Estate Board of New York (REBNY) and a number of brokerages, filed a petition last month to stop the new rule, which resulted in a temporary restraining order. The office of  State Attorney General Letitia James on Friday asked for a three-month extension to respond to the lawsuit, pushing the court date from this week to June 12.

The guidelines put forth in February by the DOS said real estate brokers hired by landlords cannot charge renters a fee and added that any agent working on behalf of a landlord who collects a fee “for bringing about the meeting of the minds between the landlord and tenant” can be subject to discipline.

In response, REBNY, the New York State Association of Realtors (NYSAR), and brokerages like Douglas Elliman, Brown Harris Stevens, and Corcoran, filed an Article 78 petition seeking a reversal of the new guidelines. The lawsuit claims the guidance was an “unlawful, erroneous, and arbitrary” interpretation of the rent reform passed by state lawmakers last June.

In a statement on Friday, REBNY said the additional time is “necessary for preparation of court documents” regarding the complicated issue.

“The Attorney General’s Office submitted a letter requesting an extension of the dates in the litigation,” REBNY President James Whelan said in a statement. “Attorneys for the government and the industry recognize the complexity of the issues raised in the matter and agree that additional time is necessary for preparation of court documents.”

State lawmakers passed major rent reform legislation last June that expands tenant protections, prevents landlords from deregulating rent-stabilized apartments, and caps security deposits to one month’s rent. And brokers and salespeople cannot charge more than $20 for a rental application, including a background and credit check. The $20 cap does not apply to sales of co-op or condo properties or to fees imposed by a co-op or condo board.

With the extension granted, the temporary restraining order of the DOS rule will remain until the June 12 court date.

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