REBNY Sues to Block Broker-Fee Law as FARE Act Kicks In

The Real Estate Board of New York (REBNY) filed a federal lawsuit Monday to block the Fairness in Apartment Rental Expenses (FARE) Act. 

The law would require landlords to pay broker fees when brokers advertise rental listings, according to The Real Deal.

Behind The Suit

REBNY, joined by several brokerages, co-op boards, and the New York State Association of Realtors, claims the law violates constitutional protections and threatens to upend the city’s rental market.

Under the FARE Act, a broker who lists or advertises an apartment is assumed to be hired by the landlord, meaning tenants cannot be charged broker fees—commonly 15% of a year’s rent. 

Landlords typically pay brokers less, around one month’s rent (8% of annual rent), creating fears among brokers that the law will significantly reduce their incomes.

Legal Argument

REBNY’s lawsuit hinges on several key claims:

• Free Speech Violation: The group alleges the law infringes on brokers’ First Amendment rights by discouraging the publication of rental listings. Brokers argue that landlords may limit or eliminate listings altogether to avoid paying fees, reducing market transparency.
• Interference with Private Contracts: The complaint argues that the law unlawfully interferes with private agreements between landlords, tenants, and brokers, violating the Constitution’s Contract Clause.
• Pre-emption of State Law: REBNY contends that the FARE Act oversteps local authority and conflicts with existing state regulations governing broker fees.

“The FARE Act is bad policy and bad law,” said Carl Hum, REBNY’s general counsel. “This legislation will not only raise rents and make it harder for tenants to find housing but also infringes upon constitutional guarantees of free speech and contract rights.”

Impact on Rentals

Brokers argue the law will harm both transparency and affordability. In New York City’s competitive rental market, property owners often allow multiple agents to advertise units on a non-exclusive basis. 

REBNY warns the FARE Act will discourage such practices, leading to fewer listings, less visibility, and greater reliance on word-of-mouth or direct broker hiring—where tenants could still end up paying fees.

“Listings will not appear on brokers’ proprietary websites, nor will they appear on third-party websites,” the lawsuit states. “Renters will have to rely on word of mouth, or hire a broker—and still pay the fee—to find an apartment.”

Opponents of the law, including REBNY, also argue landlords will simply shift broker costs onto tenants by increasing rents, though this option does not apply to rent-stabilized units.

Confident Supporters

Council member Chi Ossé, the bill’s sponsor, anticipated REBNY’s legal pushback. “We worked extensively with the Law Department in putting this bill together, and I believe we do have a strong argument for this bill if it does go into court,” Ossé said following the City Council’s approval of the FARE Act in November.

Supporters claim the law will ease financial burdens on renters, particularly during lease negotiations. Broker fees—often thousands of dollars—are cited as a barrier for tenants seeking to move or renew leases.

What’s Next?

Although the FARE Act became law Monday, it will not take effect for another 180 days, giving REBNY time to seek an injunction and challenge its implementation. 

REBNY has hired Claude Szyfer of Hogan Lovells, the attorney who previously helped overturn a similar state-level broker-fee ban in 2021.

The legal battle will likely set a precedent for broker-fee policies in New York City and beyond. With rising rents and housing affordability remaining contentious issues, the outcome of this case will have wide-reaching implications for tenants, landlords, and brokers alike.