NYC Broker Fees Law – What Tenants Needs to Know?

By: ROS Team

Share the Post:

If you have ever sold a property you must have known how effective the services of real estate agents turned out for you. They do it all on your behalf and often go to extra lengths to serve your best interests.

They are the experts of the market and are equipped with the appropriate knowledge about the state laws and lease terms which makes selling or buying property a smooth ride for the landlord or tenant.

A pro-tenant reform in the structure of the broker’s fee is recently been framed by the Department of State (DOS). According to the clarification served by the department, the law effectively banned the practice of asking prospective tenants to pay a broker’s commission. According to these developments, the broker’s fee which has historically been transferred to the tenants must now be paid by landlords instead.

However, if tenants decide to hire the services of a broker, they will still have to pay a commission or fee.

The following is the important information you need to know about the NYC broker’s fee Law.

What is a Broker’s Fee?

A broker’s fee is, basically, a small amount of money you pay to the real estate agents for their services. Real estate agents link landlords and potential tenants then charge those renters a certain amount of fee somewhere from 10 to 13 percent of one year’s rent. Agents give their best services and it is the chief source of bread and butter for their families.

In the recent development in the law, it imposed a ban on agents hired by a landlord from accepting the fee. Instead, the order said, the landlord should be asked to pay the broker’s commission.

What do you Understand by a Broker as “A Landlord’s Agent”?

According to the law, a landlord’s agent is defined as a landlord’s listing agent or an agent who works with a listing agent. Who serves s a broker’s agent to find a potential tenant.

But there is a lot of grey area in the discussion following the law. It is still a matter of confusion how DOC will define the term here. It was seen that when the new guidance came in the market, agents insisted tenants sign a form that says they represent them: tenants. That form would give agents the legal ground to collect the fee.

What do you need to do Until the Final Verdict Comes?

Though the laws were implemented the restraining orders from the court have effectively stopped the implementation of new guidelines. Meanwhile, if you are looking to find an apartment with the help of a real estate agent. You are supposed to pay the commission.

What Lies in the Store for Tenants Regarding the New Rule?

To be honest, there is uncertainty about it. The matter is still in court and hearings have been postponed for the time being. If we look at the new information it says “a landlord’s agent” who asks for a broker’s fee from a tenant will be entitled to disciplinary action.

Am I Going to Pay High Rent if the Landlord has to pay the Broker’s Fee?

Generally, this is how things work in the market. Any additional tax is generally added to the retail cost. Therefore, for those apartments that aren’t rent regulated, landlords could transfer the additional cost of paying the broker’s fee to tenants.

What if you Paid a Broker’s Fee in the Period when the Law was Implemented in June but this Guidance Came Out in January?

As clearly mentioned in the guidance, the law is not retrospective. This exactly means that it will not affect any dealings or transfers conducted before the issuing of guidance; on 31st January. In case you paid the broker’s fee in between the interim, it is not subject to refund now.

One additional tip here is that if an agent is breaching the new code and asking for a commission. The best way is to discuss the new development over email or printed copies of the law. You may also register an issue with the DOC department or can sue in court.

How Likely is it that Lawsuits Revoke the Changes?

To be honest, it’s quite possible. So far the matter is in court and it may swing either way. To clear the doubt in the first place, restraining orders on the hearing does not mean any verdict of turning down the new guidance.

In the wake of a health emergency, hearings are postponed to let both opponents give a fair chance of defense. It is expected that restraining orders are likely to stay by September at a minimum.

What Tenant should know in this Discussion?

First thing first, it is going to take several months for this matter to settle. Until then nothing can be said with utmost certainty.

For the confusion that whether to rent now or later? The best advice anyone can give you is that if you are forced by the circumstances to move right away then you shall go on and rent an apartment. For those who can take the liberty of dragging this matter for some months. They probably shall wait and let things unfold to take a wiser decision.


Do Renters have to Pay Broker Fees in NYC?

In New York City, it is common for tenants to bear the cost of the broker fee, but there are exceptions. Occasionally, landlords may choose to cover the fee themselves as a means to expedite the rental process or attract renters with an extra incentive.

What does a Broker Fee mean in NYC?

A broker fee in NYC is a fee paid to a real estate broker for finding and securing a rental property for a tenant. Before May 2021, it was typically 15% of the annual rent, but it has been mostly banned by law in NYC.

When did the NYC Broker Fee Law Take Effect?

The NYC broker fee law took effect on June 14, 2019.

How to Calculate Broker Fee NYC Rental?

Broker fees for NYC rentals used to be typically 15% of the annual rent, but most landlords and real estate agents are not allowed to charge tenants a broker fee in NYC.

Does the NYC Broker Fee Law Apply to all Rental Apartments?

Yes, the NYC broker fee law applies to all rental apartments, including those in co-ops and condos.

Are there any Exceptions to the NYC Broker Fee Law?

Yes, there are some exceptions to the NYC broker fee law. For example, the law does not apply to rentals in buildings with fewer than six units, and it does not apply to rentals where the tenant uses their own broker.

Who is Responsible for Paying the Broker Fee Under the NYC Broker Fee Law?

Under the NYC broker fee law, the landlord is responsible for paying the broker fee.

Can a Landlord Require the Tenant to Pay a Broker Fee?

No, a landlord cannot require the tenant to pay a broker fee under the NYC broker fee law.

What if a Landlord or their Agent Tries to Charge more than one month’s Rent as a Broker Fee?

If a landlord or their agent tries to charge more than one month’s rent as a broker fee, the tenant can file a complaint with the New York State Department of State.

Can a Landlord Require a Tenant to use a Specific Broker?

No, a landlord cannot require a tenant to use a specific broker under the NYC broker fee law.

What should Tenants do if they have Questions about the NYC Broker Fee Law?

Tenants who have questions about the NYC broker fee law should contact a housing attorney or a tenant advocacy group for assistance.

The Wrapping Words:

It is indeed a matter of pleasure for the renters who seek rental apartments in NYC is that probably you no longer have to pay the hefty broker’s fee.