New York City brokers and landlords attempting to skirt the city’s upcoming ban on residential broker fees may now face fines of up to $2,000, according to a proposal from New York City’s consumer protection agency.
The Department of Consumer and Worker Protection released a plan last week to enforce the Fairness in Apartment Rental Expenses (FARE) Act. The guidelines are set to take effect in mid-June, pending ongoing legal challenges from the city’s real estate industry.
The department proposed a series of escalating fines for landlords and brokers caught illegally charging tenants. A first violation would cost $750, followed by $1,800 for a second offense and $2,000 for any subsequent violation.
The proposal also includes an initial $375 fine for brokers who fail to disclose in a listing all fees to be paid by a tenant in a “clear and conspicuous manner” and for failing to provide an itemized list of fees. Both of those violations face a maximum fine of $1,000.
The proposal would add some heft behind the hotly-contested bill targeting the city’s long-standing practice of tenants covering a broker’s costs, which can be up to 15 percent of the annual rent for an apartment.
The proposed penalties will be finalized after a May 14 hearing held by the department.
The fines — and the FARE Act itself — are still facing a lawsuit filed by the Real Estate Board of New York, which claims that the law violates brokers’ free speech by dissuading them from posting open listings.
REBNY also claims that the state, not the city, has the authority to govern broker fees.
“Consideration of penalties related to the FARE Act is premature when the constitutionality of the law is being reviewed in federal court,” a spokesperson for the industry group said in a statement.
But the law, which was passed with a large majority in the city council, is being supported in court by Governor Kathy Hochul and state Attorney General Letitia James, who filed papers last month affirming the city’s right to determine how broker fees are paid.
