REBNY Wants to Block Incoming Broker Fee Rules

The Real Estate Board of New York (REBNY) is pushing hard to block a controversial new law aimed at shifting the burden of rental broker fees from tenants to landlords, per The Real Deal.

Behind The Move

The FARE Act, passed by the New York City Council in November 2024, requires landlords to pay for the brokers they hire rather than passing the costs onto tenants. 

It’s scheduled to take effect in June 2025 and has sparked intense debate, with both industry stakeholders and city officials weighing in on its potential impacts.

REBNY filed a motion for a preliminary injunction to prevent the Fairness in Apartment Rental Expenses (FARE) Act from taking effect, arguing it will disrupt the rental market and interfere with private contracts.

Legal Challenges

REBNY’s motion for a preliminary injunction, filed on January 12, argues the FARE Act violates constitutional rights and will harm the rental industry. The trade group asserts that brokers will find it difficult to adapt financially to the new regulations, especially if they are forced to retool their business models to comply with the law.

In its legal filings, REBNY contends the FARE Act also interferes with private agreements between landlords and brokers, undermining existing contracts that typically stipulate tenants will cover the broker fee.

REBNY’s motion also warns the law could cut the number of rental listings available to consumers. Brokers may avoid advertising listings altogether because doing so could result in penalties. This, in turn, could discourage landlords from working with brokers, shrinking rental inventory.

Supporters And Critics

The FARE Act has generated a wave of responses from both supporters and critics. Advocates of the law, including Council Member Chi Ossé, argue it provides relief to tenants by eliminating the burden of hefty broker fees, which often add thousands of dollars to the cost of renting a home. Ossé described REBNY’s legal challenge as an attempt to “undermine the voices of city residents.”

On the other side, property owners and brokers have expressed concern that the law will harm their businesses. Eric Porco, head of the rent brokerage 4 Corners Realty, argued that the FARE Act would put additional pressure on small landlords who are already struggling with rent regulations from 2019.

According to Porco, the cost of covering broker fees could push some landlords into the red, making it harder to maintain and improve their properties.

Impact on Rentals

Critics of the FARE Act, such as Robert Rahmanian of REAL New York, claim that the law will lead to a less transparent rental market, with fewer listings available to tenants. 

Under the law, brokers who advertise rental units are assumed to be working on behalf of the landlord, meaning they cannot charge the tenant for their services. As a result, Rahmanian predicts fewer landlords will want to pay for brokers to market their properties, leading to fewer rental listings.

With fewer brokers in the market, there is also some concern that smaller landlords, particularly those who use multiple agents to market properties, will stop sending listings to brokerages altogether. This would limit tenant access to available apartments and reduce competition in the rental market.

What’s Next

The legal battle over the FARE Act is expected to intensify in the coming months. REBNY’s motion for a preliminary injunction is an urgent attempt to delay the law’s implementation while the lawsuit is litigated. 

If the court rules in favor of REBNY, the law’s effective date could be pushed back or revised, potentially leading to further amendments or even repeal.

For now, the future of the FARE Act hangs in the balance as both sides prepare for a protracted legal fight. As the case moves through the courts, the broader implications for New York’s rental market and its residents remain uncertain.