Judge Puts Temporary Freeze On Plans To Outlaw Tenant-Paid Broker Fees

It is business as usual for New York City rental brokers, who will be allowed to collect renter-paid commissions — for the next few weeks at least.

Last week, the industry was taken by surprise when state regulators said tenants could no longer be charged a broker fee, unless they specifically hired a broker themselves. Instead, landlords would now have to pay the fees to the brokers they hire. The change is attached to the new rent regulation laws passed last year. 

However, a temporary restraining order was issued Monday afternoon by a New York judge, after industry members filed an Article 78 petition earlier that day, The Real Deal reports.

The lawsuit argued that the change was an “unlawful, erroneous, and arbitrary” interpretation of the state’s rent regulation laws. The matter will return to court in March 13, per TRD.

“The entry today by the Court in Albany of an order temporarily halting the implementation of New York State Department of State’s interpretation of the Statewide Housing Stability and Tenant Protection Act means that thousands of hardworking, honest real estate agents across New York State can do business in the same way they did prior to last week’s DOS memo without fear of discipline by the DOS,” Real Estate Board of New York President James Whelan and New York State Association of Realtors President Jennifer Stevenson said in a joint statement.

“We look forward to ultimately resolving this matter in court in the weeks ahead.” 

Last week’s announcement prompted an immediate reaction from those in the real estate industry, some of whom claimed it would result in increased rents. REBNY had vowed to challenge the new rule in court, while Community Housing Improvement Program Executive Director Jay Martin said it would "decimate" the broker industry.