02/18/2020
The Department of State has intervened in the economics of New York’s rental market.
Landlords must now pay the broker fees for real estate agents they hire to represent their interests, according to new guidance from the DOS.
This is a reversal from the tenant-pays system that is the norm in rental transactions in New York City.
Any real estate agent acting on behalf of a landlord that accepts a broker fee paid by a tenant could be subject to discipline. Agents representing a tenant are not affected by the guidance.
The guidance is dated Jan. 31 and offers the DOS’ interpretation of the rent laws. Though guidance is not legal advice and is subject to change, it has been used since the laws passed in June to clarify implementation, most notably on whether real estate agents must also adhere to a cap on the amount they can charge renters for application fees.
DOS’ interpretation is drawing strong pushback from the industry. The Real Estate Board of New York, which learned about the guidance yesterday, says it’s “exploring legal action” to reverse the interpretation.
New guidance from the Department of State says that rental agents representing New York landlords will be subject to discipline in tenants pay their broker fee.
