On November 13, 2024, the New York City Council passed Introduction Bill No. 360-A, the Fairness in Apartment Rental Expenses Act (FARE Act). The FARE Act will require whomever engages a real estate agent in a residential real estate rental transaction to be responsible for paying the agent’s fees. Landlords will no longer be permitted to charge broker fees to tenants for the landlord’s broker.
Any person found to violate the FARE Act will be subject to a civil penalty of up to $1,000 for the first violation and $2,000 for every subsequent violation within a two-year period.
The law still needs to be signed by Mayor Adams and, if signed, will become effective 180 days later. Because the Council passed the bill with a super-majority, it is anticipated that, in the event the Mayor vetoes the bill, the Council will override his veto.
The law applies only to residential rental transactions, not residential sales or commercial transactions. Cooperative corporation leases to dwelling unit shareholders are exempt from the law.
Notably, the law also applies where a landlord merely permits a broker to advertise a residential rental unit. A posted listing alone is sufficient to establish an agreement between a landlord and agent and the landlord will be responsible for paying the agent’s fee.
The City Council has suggested that this law will make renting more affordable for tenants. The Council attempted to prevent workarounds of the law by specifically noting in the Bill that a rental may not be conditioned upon the tenant engaging an agent, including a dual agent along with the landlord. However, we are not convinced that this will lower costs for all tenants. Presumably, rents for non-regulated units will simply go up to cover the costs.
Furthermore, we do not yet know what this means with respect to the arrangement for fees between brokers and landlords going forward. The standard 12%-15% broker fee could be renegotiated. As we obtain more information, we will continue to keep you updated.
The full text of the Bill can be found here.
Contact Us
For more information, feel free to consult your attorney of record or reach out to our team here.
Written by: Logan O’Connor, Partner in the Administrative Law Department