The Real Estate Board of New York really thinks the judge who let the FARE Act go into effect this week got it wrong.
The trade group filed a notice on Thursday that it is appealing Judge Ronnie Abrams’ Tuesday decision, which dismissed REBNY’s motion for a preliminary injunction to pause the Fairness in Apartment Rental Expenses, or FARE, Act and several of the group’s claims against the law, such as the law violating free speech rights and preempting state law.
Though the law is already in place, the appeal is seeking to revive the bulk of REBNY’s claims and stop the law in its tracks while the legal fight plays out. A decision in REBNY’s favor on the latter would mean policy whiplash for tenants and owners, who are now figuring out how to navigate the new commission landscape.
“REBNY is continuing its fight for agents and members to halt the FARE Act, which has already resulted in the removal of thousands of listings from platforms in just 48 hours,” REBNY President Jim Whelan said in a statement. “While brokers can still collect rightful compensation in certain scenarios under this law, average rents will still climb, renters now have less choice and the rental search process has become less transparent.”
The FARE Act went into effect Wednesday, requiring landlords to pay for rental brokers they hire. Tenants are typically on the hook for the fee, which in many cases is 15 percent of the first year’s rent.
The City Council approved the FARE Act in November with a veto-proof majority. The following month, REBNY, the New York State Association of Realtors and some individual brokers and owners filed a lawsuit alleging that the law violates the First Amendment because it discourages the publishing of rental listings. Under the FARE Act, a broker who advertises a rental is assumed to have been hired by the landlord.
The number of rental listings on StreetEasy dropped by more than 1,000 on the first day that the FARE Act went into effect.
The lawsuit also claimed that the FARE Act flouts the Contract Clause and preempts state law. The group filed a motion for a preliminary injunction in January, hoping the court would prevent the law from going into effect as its lawsuit moved forward. The city filed a motion to dismiss the lawsuit in February.
Abrams rejected the motion for a preliminary injunction and granted the city’s motion on three of REBNY’s four claims.
Abrams found that REBNY didn’t show that it was likely to succeed in proving its case against the FARE Act, noting that while the trade group framed its fight against the law in constitutional terms, it was effectively trying to block “the enforcement of legislation that they view as bad policy.”
She allowed one of REBNY’s allegations, that the law wrongfully interfered with existing contracts, to move forward, but cast doubt on whether the claim outweighs the law’s “significant and legitimate public purpose.”
REBNY is appealing to the U.S. Court of Appeals for the Second Circuit.
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