The FARE Act (Local Law 119 of 2024) is a New York City rental law that reshapes how brokerage fees may be charged in residential leasing transactions, with enforcement grounded in landlord-tenant and real estate law. Effective June 11, 2025, the law mandates that the party who hires a real estate broker is legally responsible for their compensation, effectively shifting the financial burden away from prospective tenants who did not retain the agent. Standards and deadlines vary by state and claim type. SJKP LLP provides the strategic oversight necessary to audit rental and sales transactions in the post-FARE Act era. We move beyond "market custom" to perform a surgical review of agency agreements and the procedural rails that define financial liability in New York property transfers.
1. Defining the NYC Broker Fee under New York Law
In the clinical world of New York real estate law, a broker fee is a commission earned for being the "procuring cause" of a lease or sale.
Agency and Fiduciary Duty
Under New York Real Property Law Article 12-A, a broker acts as an agent and owes a fiduciary duty to their principal. This relationship determines who is contractually obligated to pay. While NYC was historically an outlier, the 2025–2026 legal landscape has recalibrated this to align with standard contract principles: the hiring party bears the cost.
Legal Commission Vs. Deceptive Acts
It is vital to distinguish between a legal commission and prohibited "key money." Attempting to disguise illegal surcharges as brokerage fees may constitute a deceptive act or practice under General Business Law §349. We audit the flow of capital to ensure that payments are not used to circumvent rent stabilization or other housing protections.
2. NYC Fare Act Evidence Checklist: Essential Documentation
To challenge an unlawful NYC broker fee or seek restitution, you must secure the following evidentiary "rails":Original Listing: A copy of the advertisement (StreetEasy, Zillow, etc.) showing how the fee was marketed.Agency Disclosure Form: The document required by New York Real Property Law §443 at the "first substantive contact."Itemized Fee Statement: A clinical breakdown of all fees demanded before the lease execution.Communication Logs: All timestamped emails and text messages discussing the hiring of the broker and fee conditions.Signed Lease & Riders: The final legal instrument and any additional riders referencing move-in costs or brokerage.
3. Step-by-Step Procedure: Resolving a Broker Fee Dispute
If you are facing an unlawful fee demand or seeking a refund, the legal process typically follows this 6-line trajectory:Demand Letter: Formally request a refund or withdrawal of the fee based on NYC FARE Act violations.Filing the Complaint: Initiate legal action by filing a formal complaint in civil court or with the DCWP.Service of Process: Legally deliver the summons to the broker or landlord via a formal service of process.Discovery: Compel the production of internal agency agreements and landlord-broker communications.Settlement or Trial: Negotiate a restitution package or present the case before a judge.Judgment & Collection: Secure a final court order and enforce the recovery of the illegal fee.
4. When a Broker Fee Violates the Fare Act
New York courts evaluate broker fee disputes by examining the practical agency relationship and compliance with the Administrative Code.
Fees Charged without Tenant Representation
It is a violation to charge a tenant a broker fee if the tenant did not hire the broker. If a broker was "publishing" the listing with the landlord's consent, they are legally presumed to be the landlord's agent and cannot collect a fee from the tenant.
Disclosure Failures and the Statute of Frauds
Under New York Department of State (DOS) rules, a broker who fails to provide timely agency disclosure may forfeit their right to a commission. Furthermore, the Statute of Frauds requires high-value commission agreements to be in writing. An oral agreement for a NYC broker fee is often unenforceable in a forensic legal audit.
5. Why Strategic Legal Review Matters in NYC Fare Act
NYC broker fee disputes are a technical discipline where the difference between a valid commission and a terminal liability depends on the forensic integrity of the agency relationship. In the 2026 market, attempting to shift brokerage costs onto a non-hiring party is a strategic failure that invites statutory penalties and civil lawsuits. SJKP LLP provides the clinical clarity needed to navigate these high-friction transactions. We move beyond the broker’s pitch to perform a cold audit of the disclosure records and the HAP (Housing Assistance Payments) or lease contracts involved.
