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.

Can a landlord's agent charge a tenant its commission?

That issue is going to be decided by the New York County Supreme Court in the case of McLendon v. Kelley after the court refused to dismiss the case, but the case should already be dismissed under the Court's own reasoning.

The law that the tenant is relying on in this case to block the fee charge is called The Housing Stability and Tenant Protection Act (HSTPA) and specifically, Real Property Law 238-a(1)(a), which states as follows:

Except in instances where statutes or regulations provide for a payment, fee or charge, no landlord, lessor, sub-lessor or grantor may demand any payment, fee, or charge for the processing, review or acceptance of an application, or demand any other payment, fee or charge before or at the beginning of the tenancy, except background checks and credit checks as provided by paragraph (b) of this subdivision, provided that this subdivision shall not apply to entrance fees charged by continuing care retirement communities licensed pursuant to article forty-six or forty-six-A of the public health law, assisted living providers licensed pursuant to article forty-six-B of the public health law, adult care facilities licensed pursuant to article seven of the social services law, senior residential communities that have submitted an offering plan to the attorney general, or not-for-profit independent retirement communities that offer personal emergency response, housekeeping, transportation and meals to their residents.

In refusing to dismiss the case on this law, the Court focused on the Department of State's Guidance on the topic wherein the Department had opined "that a broker for the landlord could not collect a broker fee from a perspective tenant pursuant to the above provision." However, the Court's reasoning is in error and the broker should bring a motion to reargue / renew this application for dismissal.

Operatively, the Department of State's Guidance was withdrawn on February 10, 2020 and therefore it holds no weight in this case. To substantiate this withdrawal of Guidance, see the notation at question 5. on page 4 of this hyperlink.

More importantly, in Real Estate Bd. of New York v. New York State Department of State, the Judge issued a full injunction preventing the statute from being utilized against brokers until the Court issues a decision on REBNY's Order to Show Cause, which has not yet occurred. 

This case should therefore be dismissed.