No More Broker Fees for New York RentersAbigail Cain
2019 was a banner year for renters in New York—the state legislature passed a sweeping set of reforms in July, banning the practice of charging last month’s rent upfront and setting new limits on security deposits and application fees.
2020 looks like it’s shaping up to be more of the same. This week, state regulators announced that New York renters can’t be charged broker fees. It’s hard to understate how big of a shake-up this is—NYC is one of just two cities in the U.S. where tenants are routinely expected to pay a broker’s commission, rather than landlords.
This isn’t the result of a new law, though. Since the reforms were passed last summer, the Department of State has spent months clarifying the letter of the law. For instance, in September, they announced that brokers weren’t allowed to charge application fees of more than $20. (Although the law explicitly banned landlords from doing so, it wasn’t initially clear if brokers were also covered.) This week, they released another series of clarifications. The big one is, obviously, outlawing broker fees for renters—but we broke down four more updates that deal with things like additional pet deposits (not allowed) and whether too-high security deposits are grandfathered in (it depends).
Renters can’t be charged broker fees
The rationale behind banning broker fees for tenants is this line from New York law:
“no landlord…may demand any payment, fee, or charge for the processing, review or acceptance of an application, or demand any other payment, fee or charge before or at the beginning of the tenancy, except background checks and credit checks.”
So, since a broker fee would be considered a “payment, fee or charge before or at the beginning of the tenancy”—and it’s not related to a background or credit check—landlords are effectively banned from requiring that a prospective tenant pay them before moving in.
Of course, these clarifications don’t eliminate broker fees completely. Now, landlords and property managers will bear the burden of paying them. And a renter can still hire their own broker, in which case they still have to pay the fee.
The limit on security deposits isn’t retroactive
Say you moved into your apartment in early 2019, before the new rental laws were passed, and your landlord asked for two months’ rent as a security deposit. Now the cap is one month’s rent. So—can you get the extra back?
Turns out, the answer is no. If your current lease was signed before July 14th, 2019, your landlord can hang onto the money until the lease expires. At that point—assuming you plan to renew—your landlord should return any of the deposit that exceeds one month’s rent under the new lease. But if you signed your current lease after July 14th (even if you were renewing a lease for an apartment you’ve been living in for a few years), your landlord is required to abide by the new limit.
Renters can’t be charged additional pet deposits or move-in fees
That said, if your landlord requested a security deposit that’s less than a month’s rent, they’re probably still allowed to ask for an additional pet deposit—as long as the two deposits added together don’t go over the one-month cap.
The $20 cap on application fees is per person, not per application
Landlords can charge each person applying to an apartment a separate application fee. Also, these fees are capped at $20. So, if you were applying to an apartment with two other roommates, a broker or landlord could ask for $60 in total application fees.
But if you provide your own background or credit check that’s less than 30 days old, you can’t be charged an application fee at all.
Landlords can’t charge illegal late fees, even if they’re in the lease
Even if you signed a lease before the new laws went into effect—so, before July 14th, 2019—your landlord can’t charge you late fees that are over the new limit. It doesn’t matter what your lease says. A late fee of more than $50 is always illegal in New York.
For more, head over to Caretaker's guide to rental law. We break down everything there is to know about renting and subletting an apartment, in New York and beyond.