A New York judge has temporarily suspended the state’s week-old ban on broker fees for tenants, and, as a result of the ruling, real-estate brokers will be able to continue to collect commissions from tenants until at least March 13. On Monday in Albany, Supreme Court Justice Michael Mackey issued a temporary restraining order against the ban after powerful real-estate-industry groups sued the New York Department of State alleging it had exceeded its legal authority in applying the sweeping new laws.
The Real Estate Board of New York, which lobbies on behalf of property owners, developers, and brokers in New York City, has argued that the Department of State “illegally overstepped its role in issuing its new guidance on rental brokerage commissions” and that the ban was instituted without giving the industry enough time to respond. The organization, joined in the suit by the New York State Association of Realtors, has said the ban has upended the lives of thousands of real-estate agents and claims it will lead to higher rents for tenants.
The state ruling that instituted the ban and went into effect last week shocked the real-estate industry and quickly sent it into a panic. There was also at least some evidence that brokers were continuing to charge the fees even after the ban came into effect.
The regulation prohibited the broker fees that renters are often forced to pay before being allowed to move in. Such fees are particularly common in New York City, where they are often unavoidable and typically cost more than a month’s rent — making them one of the largest financial obstacles would-be tenants face when looking for a new apartment. Under the ban, tenants would have to pay broker fees only if they had hired the broker themselves, as is the case in most U.S. cities. New York brokers could still charge landlords the fee, however.
The restraining order is in place through at least March 13, when the New York Department of State has to respond to the ruling in court. There is no indication of how the court will ultimately rule, but the real-estate industry will undoubtedly continue to put up a big fight.
