NYC rentals changed on June 11, 2025 forever.
Historically, landlords hired brokers to list their rentals with the plan to make the tenant pay the landlord's broker (a/k/a, listing agent), as an additional fee set forth in the lease. This created a problem where tenants then had to do math and add that cost to the cost of their rental to know how expensive leasing the property was going to be. Now, NYC has determined that math is not for tenants, but only for landlords moving forward. As such, landlords now need to build that cost into their lease charges (i.e., gross up) and pay their broker's commission directly without tenant involvement.
That's all fine and good; albeit slightly pointless, but the rub is in the statutory language, which is going to result in lawsuits.
Specifically, the FARE Act doesn't just prevent this practice in the future, but it prohibits a broker from collecting a fee that was previously earned and legally, vested, in the broker, but not yet paid. This means that a broker, who did the work, now can't be paid by a facial reading of the statute. Good thing that the Contracts Clause of the US Constitution renders this provision unenforceable because otherwise the government will have brokers be forced to have worked for free without landlords and tenants ever having to pay for those services.
Here's another rub in the statute; A landlord who has a listing agreement with a broker that says that the tenant pays because, now, the tenant legally can't pay. So, will that landlord let the broker out of the contract or will that landlord insist that the broker needs to work for free because the contract signed with the broker says the broker will work for free for the landlord. This seems like it is going to result in a lot of litigation to rescind these listing agreements under the Frustration of Purpose Doctrine.
The final issue is the requirement that the landlord or their agent must now provide an itemized written disclosure of any fees that the tenant must pay to the landlord, or to any other person at the direction of the landlord, in connection with such rental. However, what about when the fees are at the direction of the co-op or condo, but such direction is set forth in the House Rules / Bylaws that are incorporated into the landlord's lease? Whose direction is that at?
If you are a residential landlord or broker, you must be sure to read the FARE Act, at section 20-699 of the NYC Admin. Code or subchapter 15 of Section 1 of Chapter 4 of title 20, and what NYC is putting out there about the law so that you can know what you have to do before you face a private lawsuit, fines, and/or restitution of any fees previously collected.
