In 2019, a sweeping set of rental reforms were passed in New York. These new laws significantly tightened the rules around application fees, which were previously unregulated.
Application fees in New York are capped at $20
New York landlords are prohibited by state law from charging application fees that exceed the actual cost of conducting a background check and credit check. The fee can be no more than $20 per applicant.1
A landlord cannot collect the fee until they have given the potential tenant a copy of their background or credit check, along with a receipt or invoice from the company that conducted the screening.2
Although the law says that "no landlord, lessor, sub-lessor or grantor" may charge an application fee larger than $20, it did not explicitly mention brokers. This loophole was closed in September 2019, when the New York Department of State issued a statement that the $20 limit also applies to licensed real estate brokers and salespeople.4
Fee must be waived if applicant provides their own reports
If an applicant provides a copy of a credit check or background check that was conducted within the last 30 days, then the landlord must waive the application fee.2
Landlords may not charge any other processing fees
Beyond the application fee—which is intended to cover the costs of running a background or credit check on an applicant—landlords in New York are barred from charging additional fees for the processing, review, or acceptance of an application. The law explicitly states that no landlord may "demand any other payment, fee or charge before or at the beginning of the tenancy, except background checks and credit checks.”3
Brokers' fees are not allowed in certain scenarios
Real estate brokers who are licensed with New York State may charge a commission for their services. This charge—often referred to as a “broker's fee”—is typically a percentage of the first year’s rent, although that amount isn’t set by law. Under New York’s Rent Stabilization Code, a broker’s commission is considered illegal when there’s too close of a working relationship between the broker and the landlord.
For instance, a broker cannot collect a fee if they are employed by the landlord to help manage or operate the building in which the rental unit is located, or the broker and landlord share ownership of a property or other financial interest.5
Complaints against real estate brokers should be directed to the New York Department of State.6
Co-ops and condos are exempt from the $20 limit
According to the Department of State, application fees charged by a co-op or condo board are not limited to $20. The fee must be imposed by the board, however, not by the people who own the unit.4
Applicants are protected from discrimination by New York fair housing laws
All tenants in the U.S. are covered by the federal Fair Housing Act, which makes it illegal for landlords or brokers to treat people differently based on race, national origin, religion, gender, disability, or family status. But New York State has its own set of fair housing laws, which also stop landlords from rejecting applicants because of their sexual orientation, age, source of income, and more. And New York City has even more anti-discrimination laws—in NYC, landlords can't turn down a potential tenant because of their citizenship status or their occupation, for instance.
The information provided on this website does not, and is not intended to, constitute legal advice.
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