NYC’s new broker fee law already being flouted by sneaky real estate agents, tenants say: ‘Exploiting a loophole’

Well this is just un-FARE.

Sneaky New York City landlords have been using tricky tactics to get around a new law that bans them from charging broker fees to renters, The Post has learned.

Some prospective renters have reported being faced with thousands of dollars in “management” or “technology” fees — that look awfully similar to those previously charged by landlords to pay for real estate brokers.

“They’re exploiting a loophole in the law,” said Todd Roulich, a tenant broker in New York, of landlords and agents.

Others have reported being told to sign forms stating that they were the ones to hire the broker — even when that wasn’t true.

The so-called FARE Act — or Fairness in Apartment Rental Expenses — prohibits renters from being charged a “broker fee” — which is typically about 15% of the annual cost of a unit.

But the city Department of Consumer and Worker Protection, the agency responsible for enforcing the FARE Act, told The Post it has received nearly 300 “questions and complaints” about violations of the new law since it went into effect June 11.

Queens native Kelly McGarry told The Post she met brokers at two different apartment showings this month — both of which used sneaky methods to try to collect a fee.

McGarry, 27, reported that each one of the agents she met with tried to get her to sign paperwork saying she hired them, even though she hadn’t.

“I’ve applied for apartments in the past before, and I’ve never had to verify anything … of that sort,” McGarry said. “They knew the FARE Act was coming, and they were prepared to do what they could to get around it.”

One Zillow listing for an apartment in Bayside, Queens blatantly reads: “For compensation as ‘Service/Broker Fee’, you as Renter agrees to hire Jack as Broker [sic].”

Another listing, in Brooklyn’s Prospect Lefferts Gardens, even appeared to ask for a security deposit and first months’ rent as a mysterious lump sum of $5,040 — followed by $1,800 each additional month.

Reports of similar underhanded schemes also abound on Reddit, with one disgruntled tenant writing:  “Some places we reach out [to] … makes us agree to 1 month payment of fees if we sign a lease with them, and they won’t show without it.”

“I’m trying to apply for an apartment, and the broker said to apply I need to hire him as my broker to represent the application. which of course includes a broker fee,” another user said.

Other agents appear to be even more bold, with one Reddit user posting a StreetEasy listing that outright asked for a $3,500 broker fee – despite the website’s own disclaimer that “under NYC law, you can’t be charged a broker fee if you didn’t hire a broker.” 

“I’m pretty sure thru FARE we don’t have to pay this broker fee,” the user wrote. “The issue is we desperately need this place lol.” 

The Dept. of Consumer and Worker Protection said when the law went into effect that “landlords will be prohibited from passing on the fees of real estate brokers they have retained to prospective tenants” under the FARE Act.

“Landlords and their agents will be unable to pass their brokers’ fees on to a prospective tenant after the effective date of this law, even if a lease was signed before the effective date,” the agency said in a statement.

Some tenants may become even more desperate in the coming months according to The Real Deal, which reported that some landlords are already looking to raise rents to offset costs associated with hiring a broker themselves.

Allia Mohamed, CEO of real estate website Openigloo, deemed that sneaky agents and landlords attempting to ignore and try to work around the law are simply a part of a “very natural correction period” and that the matter will stabilize when bad actors are disciplined.

“What is really important is for renters to understand their rights when it comes to the FARE Act,” Mohamed said, and “making sure that they’re taking screenshots, saving links, keeping receipts, filing those complaints until we get through this correction period.”

City council member Chi Osse, who introduced the legislation last year, urged New Yorkers to report agents and landlords who continue trying to charge a broker fee to tenants.

“If you see an online listing that says a broker is working as a prospective tenants’ broker, they’re lying,” Osse said. “They posted with landlords’ permission, so they’re working for the landlord.”

To file a complaint regarding a FARE Act violation, consumers can visit nyc.gov/consumers or call 311.