What You Should Know About REBNY’s Challenge to the Broker Fee Law

A federal court decision currently pending in the matter Real Estate Board of New York v. City of New York could have sweeping consequences for how residential rental transactions are handled throughout New York City.

On May 2, 2025, Judge Ronnie Abrams of the Southern District of New York heard oral arguments on two key motions:

  1. A motion for preliminary injunction filed by REBNY, among other plaintiffs, seeking to block the City’s enforcement of the Fairness in Apartment Rental Expenses Act (“FARE Act”), and
  2. A motion to dismiss filed by the City of New York.

As of now, the Court has not issued its decision.  Property owners, landlords, and managers should nonetheless be paying close attention.

What’s at Stake?

The FARE Act seeks to remove the requirement of a residential tenant to pay a broker fee for leasing an apartment when the broker is hired by the landlord. This is a significant shift with respect to which party should bear the cost of brokerage services.

If the law stands:

  • Landlords could become directly responsible for broker commissions, increasing operational costs.
  • Rental pricing structures may shift to reflect this change, potentially leading to higher monthly rents as landlords try to offset new expenses.
  • Lease-up and marketing strategies may need to be re-evaluated, especially for owners of large portfolios or multi-family assets.

Why the Lawsuit Matters

REBNY and its co-plaintiffs argue that this law directly conflicts with state-level real estate regulations in that it unfairly alters long-standing apartment rental practices without appropriate legislative authority.

A ruling in favor of REBNY’s motion could temporarily block enforcement of the law, preserving the current structure of broker compensation until the Court makes a final determination on the issues presented.

What Property Owners Should Do Now

  • Monitor the docket: A decision on REBNY’s motion for a preliminary injunction could come at any time.
  • Evaluate lease agreements and fee disclosures: Ensure current documents are compliant but also flexible enough to adapt.
  • Stay in communication with your legal counsel: If REBNY’s motion is denied, then it is more likely than not that the FARE Act will go into effect imminently, necessitating possible updates to commission agreements and tenant communications.

Kucker Marino Winiarsky & Bittens LLP represents hundreds of owners who could be affected by this litigation and is actively monitoring it intently. We will provide an update as soon as one is available.