Loopholes and Litigation: The FARE Act Frenzy

23 June 2025

A studio in Prospect Lefferts Garden hit the market last week asking $1,800 per month — with a catch.

According to the listing description on StreetEasy, the new tenant would be expected to pay a $1,800 security deposit and $5,400 for the first month of rent — the standard rate plus about 15 percent of the annual rent.

New York City renters are accustomed to seeing that 15 percent figure, as the charge rental brokers render for their services.

But attaching that charge to the first month of rent is a new twist, likely a consequence of the city’s so-called broker fee ban, which took effect on June 11 and which bars landlords and their agents from charging broker fees to tenants.

The new law, called the FARE Act, initially wreaked havoc on the city’s rental market, with hundreds of listings disappearing from StreetEasy and landlords hiking rent prices to compensate for the extra cost. Now, a week after its implementation, the provision appears to be raising more questions than answers, as renters, brokers and property owners grapple with the shift.

So-called fees won’t fly

Prospective renters flocked to social media in the days following the law’s enactment, some airing grievances about their interactions with brokers and others crowdsourcing answers to questions about what brokers are and aren’t allowed to do in the wake of the changes.

“First day of the FARE Act banning broker’s fees and I literally got handed a contract with broker’s fee crossed off and 15 percent management fee written in,” one user, under the handle @LinkofSunshine, posted on X last week.

Chi Osse, the city council member responsible for the bill, reposted the comment with a link to file a complaint with the city’s Department of Consumer and Worker Protection, the agency tasked with enforcing the law.

Others described rental listings that advertise one monthly rate if tenants agreed to pay the broker’s fee or another, higher rate if not. One screenshot of what appears to be a StreetEasy listing posted to Reddit reads “$7,200 with Broker Fee — OR — $8,800 & NO BROKER FEE!”

When asked to comment on some of these scenarios, Carl Hum, general counsel for the Real Estate Board of New York, echoed warnings issued by the trade group, one of the chief opponents of the law, ahead of the bill’s passage. The organization, which is suing the city over the legislation, has repeatedly claimed that tenants ultimately would still bear the cost of the broker fee, likely with higher rent prices.

“As expected, the FARE Act is resulting in rising rents, fewer listings and confusion in the home search process,” Hum wrote in a statement.

Another attorney, Lieb Law founder Andrew Lieb, said the concerns raised on social media are likely examples of the kinds of issues that will be confronted in litigation after the law’s enactment, which will further define what brokers can and can’t do under the provision.

For example, baking the cost of the broker fee into the first month’s rent “could get you sued by the tenant,” Lieb said. “You’re going to have to put that as an itemization disclosure under the FARE Act.” (That listing has since been pulled off the market.)

For those rolling out the same cost as a “maintenance fee”, Lieb said that likely won’t pass the smell test.

“The term ‘fee’ means an amount of money that’s charged by a person for the provision of services to one or more persons, including, but not limited to, a commission,” Lieb said. “Calling it ‘gobbledygook’, it would still be the same result.”

Lieb also pointed to other laws, namely Good Cause Eviction and the Housing Stability and Tenant Protections Act, which already limits some of the costs of renting a new apartment like the price of the application fee.

“The amount of the deposit or advance can’t be more than one month’s rent, and if you do that, you can be liable for a penalty of two times the amount of money,” Lieb said.

Remaining questions

One of the more ambiguous aspects of the law is a provision preventing landlords or their agents from requiring tenants to hire brokers and agree to pay them a fee in order to rent an apartment.

Some prospective tenants have complained that when they reached out to brokers about a listing, those brokers offered to show them other similar listings — but only if they agree to sign a tenant representation agreement and pay a broker fee.

One Reddit user posted an email from a company called Brooklyn Heights Real Estate, explaining that, due to the FARE Act, the firm was no longer publicly listing apartments where the landlord had not explicitly hired them. The email goes on to say that they still have access to upcoming listings due to longstanding relationships and that prospective renters can access those listings if they agree to work with them and pay a fee, between 12 and 15 percent of the annual rent, for their services.

“You reached out about one of our rental listings, and I wanted to share an important update,” the email begins, referring to the law. “While many landlords are no longer covering broker fees, if you’d like to hire BHRE as your agent, we can actively search on your behalf and use our network to find the best fit.”

It’s unclear whether pitches like these will fall under the agency’s scrutiny. It’s an aspect of the law that REBNY has called for more specificity and could land some brokers in hot water depending on how it’s interpreted by the enforcing agency.

“The law is ambiguous as to how a tenant may ‘hire’ a broker, making enforcement for penalties and broker compensation extremely challenging,” Hum said, adding that DCWP “needs to provide clarity regarding conditioning, dual agency and the enforcement of existing agreements, among other everyday business practices now disrupted by this ill-conceived law.”