NYC Brokers’ Fees to Remain in Place Until at Least June

The Attorney General’s office requested an extension to respond to the lawsuit against the broker fee ban until June.

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Brokers will still be able to charge tenants fees on apartment rentals in New York City until at least June.

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Attorney General Letitia James’ office filed a request granted on Friday to extend its deadline to respond to the real estate industry’s lawsuit against the brokers’ fee ban. The extension keeps a temporary restraining order, which blocked the implementation of the ban, until both parties meet back in court on June 12.

“Attorneys for the government and the industry recognize the complexity of the issues raised in the matter and agree that additional time is necessary for preparation of court documents,” James Whelan, the president of the Real Estate Board of New York, which challenged the ban along with several brokerages, said in a statement.

A spokesperson for the attorney general’s office did not immediately respond to a request for comment.

The ban on residential broker fees started on February 4 when the New York State Department of State (DOS) issued guidance to last summer’s rent reforms that said brokers working for landlords could no longer charge the fees — which usually range from one month’s rent to 15 percent of the annual rent — to renters.

The rent laws state landlords can only charge up to $20 in application fees to renters on both rent-stabilized and market-rate apartments. The DOS’ guidelines meant that rule also applied to brokers’ fees. (Though brokers hired by tenants are still able to charge their usual fee.)

The DOS’ ban on brokerage fees caused an uproar in the real estate industry, with residential brokers pressuring tenants to sign contracts stating they were hired as tenant’s representatives, as Commercial Observer previously reported. Real estate pros have argued the ban would drive up rents around the city and put a squeeze on mom-and-pop landlords.

REBNY partnered with the New York State Association of Realtors and brokerages including Corcoran and Douglas Elliman to file a suit challenging the guidance, arguing that the DOS “usurped the role of the legislature” because the ban altered the existing laws, according to court documents. Albany Supreme Court Judge Michael Mackey issued a temporary restraining order against the ban on February 10, which will remain in place until the attorney general responds to the complaint.

Leni Morrison Cummins, a partner at law firm Cozen O’Connor, previously told CO that the temporary restraining order meant it was likely Judge Mackey would rule in favor of overturning the brokers’ fee ban.

“It’s more likely than not that the petitioners will be successful and that the DOS guidance will fail,” said Cummins.