In a blow to the Real Estate Board of New York, Gov. Kathy Hochul has joined forces with a progressive New York politician and backed the city’s fight against a lawsuit challenging the broker fee bill.
“I know what state law says, and it does not interfere with Chi Ossé’s FARE Act,” Hochul says in a video with the City Council member, posted on social media, referring to the Fairness in Apartment Rental Expenses Act. “The court should rule in favor of the city, and these broker fees? They should end forever.”
State officials on Friday filed an amicus brief supporting the city against a lawsuit filed by the Real Estate Board of New York. The brief argues that the state has a “strong interest in ensuring that state law is not improperly interpreted to invalidate tenant-protective local laws like the FARE Act.”
“At this point, the only opinion on the FARE Act that matters is that of the federal courts,” a spokesperson for REBNY said in a statement. “We remain confident in the merits of our legal arguments and look forward to our day in court.”
REBNY’s lawsuit argued that the FARE Act, which requires landlords to pay for rental brokers they hire, is preempted by state law, specifically “a comprehensive regime of laws governing the compensation of real estate brokers and salespersons.”
State officials maintain that state law doesn’t cover every aspect of residential brokerage.
“It does not dictate, with any intent to occupy an entire sphere of oversight, how a broker earns or can claim entitlement to a commission—the issue that the FARE Act primarily regulates,” the amicus brief states.
The City Council approved the FARE Act in November. The measure requires landlords to pay brokers who they hire, rather than forcing tenants to pick up the tab, which in many cases is 15 percent of the first year’s rent. REBNY has argued that landlords will shift these costs to renters by increasing rent (though they can’t do so at stabilized properties). REBNY also raised concerns that, under the law, a broker who advertises a rental is assumed to have been hired by the landlord.
The group filed a lawsuit to block the law in December and then sought a preliminary injunction to prevent the law from going into effect in June. The city filed a motion to dismiss the case in February. These motions have not yet been decided.
In the video, Council member Ossé described the lawsuit as big real estate’s “one last desperate play.”
The governor’s cameo in the video is somewhat surprising. It is not unusual for elected officials to side with renters, a significant constituency in New York. But just a few months ago, Hochul praised REBNY at the trade group’s annual event. In fact, REBNY President Jim Whelan spoke after the governor and brought up the group’s fight against the FARE Act.
During the video, the governor plugged a refrain she has used as part of her affordability agenda this year.
“It’s about time you got a break and kept more money in your pockets,” she said in the video.
The New York State Tenant Bloc responded to the video on social media platform X, calling on the governor to support a state-run voucher program in the state budget. Hochul has said such a program would be too costly.
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