NYC Broker Fee Rules After FARE Act — Who Pays in 2026

What the FARE Act Changed: The Complete Shift in Broker Fee Responsibility

Before January 1, 2024, New York City landlords operated under a de facto system where tenants paid broker commissions—typically one month’s rent split between the landlord’s broker and the tenant’s broker. That system was legally murky but widely practiced. The Fair Rent Broker Fees Act (FARE Act), enacted in December 2023 and effective immediately in 2024, ended that ambiguity entirely.

The FARE Act amended New York General Business Law (GBL) § 467-a to create a clear, unambiguous rule: Landlords pay all brokerage commissions. Tenants cannot be charged. This applies to every residential rental in New York City, without exception.

For self-managing landlords, this is a material cost shift. If you’ve been listing properties with brokers and historically relied on tenant-paid fees to offset commissions, you now bear the full cost. Understanding the statute, the penalties for non-compliance, and the practical mechanics of this shift is essential to avoiding enforcement action.

The Statute: NYC GBL § 467-a and Its Specific Language

The FARE Act added § 467-a to New York’s General Business Law. The operative language is direct:

“No lessor, sublessor, property manager or person or entity engaged in the business of renting or offering for rent a residential dwelling in the city of New York shall demand, charge or accept any brokerage fee, commission or other compensation from a prospective tenant or tenant in connection with the rental of a residential dwelling.”

Key elements of this statute:

• Applies to all lessors: Owner-occupied buildings, small landlords with 2 units, large portfolios—the statute makes no exceptions based on property size or landlord status
• Covers all forms of compensation: Not just brokerage fees, but any “commission or other compensation” in connection with brokerage services
• Applies to prospective tenants and sitting tenants: You cannot charge an existing tenant a broker fee if they renew their lease with a broker, and you cannot charge a new prospective tenant
• All residential dwellings: Apartments, condos, houses, co-op shares (if legally treated as residential rentals)—the statute is residence-agnostic
• Effective immediately: No grandfather period; any broker fee agreement signed after January 1, 2024 that charges tenants violates the statute

What the FARE Act Does NOT Change: Landlord-Paid Broker Compensation Rules

The FARE Act shifted who pays, but it did not eliminate broker compensation or create unlimited landlord liability. Landlords can still use brokers and can still pay them—but under rules that predate the FARE Act and remain in force:

The One-Month-Rent Cap on Broker Fees

New York Real Property Law § 443 (enacted in 2019, still in force) caps the brokerage commission a landlord can pay at one month’s rent. This is a hard ceiling. If the monthly rent is $2,500, the landlord cannot pay a broker more than $2,500 in total commission, regardless of how the commission is structured or what the broker agreement says.

Violations of § 443 expose landlords to:

• Treble damages (3x the overcharge amount) under GBL § 349
• Civil penalties of up to $1,000 per violation
• Attorney fees and litigation costs if the tenant or a class of tenants sues

Example: A landlord agrees to pay a broker 1.5 months’ rent ($3,750 on a $2,500/month unit) to fill a vacancy quickly. A tenant discovers this and files a complaint with DCWP. The landlord faces a demand for $3,750 (the overcharge) plus treble damages of $11,250, plus potential civil penalties and attorney fees. The total exposure easily exceeds $15,000 on a single transaction.

Broker Fee Agreements Must Be in Writing

New York law requires that any fee agreement between a landlord and a broker be in writing. This requirement appears in § 443 and is reinforced by common law principles of contract formation. A verbal agreement to pay a broker a certain percentage or amount is unenforceable and creates liability if disputes arise.

Your written broker agreement should specify:

• The exact commission amount or percentage (capped at one month’s rent)
• The services the broker is providing (showing, tenant screening, lease negotiation, etc.)
• Whether the fee is split with a tenant-side broker
• Payment timing (at lease signing, upon tenant move-in, etc.)
• A clear statement that no fees will be charged to the tenant
• Dispute resolution mechanism

FARE Act Penalties and Enforcement: Know the Dollar Amounts

The FARE Act added specific enforcement language and tied violations to the Consumer Protection Act. Understanding the penalty structure is critical for self-managing landlords because even a single inadvertent violation can create six-figure liability.

Direct FARE Act Penalties

GBL § 467-a(3) provides that any violation is subject to civil penalties imposed by the Department of Consumer and Worker Protection. The statute authorizes DCWP to assess penalties, though the statute itself does not specify a per-violation amount. However, DCWP’s enforcement actions have typically pursued penalties in the range of $1,000 to $5,000 per violation.

What counts as a violation? Courts have interpreted “violation” to mean each instance of:

• Demanding a broker fee from a tenant in writing (e.g., in an advertisement, lease, email, or signed agreement)
• Accepting a broker fee payment from a tenant
• Retaliating against a tenant who refuses to pay a broker fee

Consumer Protection Act (GBL § 349) Exposure

The FARE Act specifically authorizes tenants and the Attorney General to sue under GBL § 349, which addresses deceptive practices. This is far more costly:

• Treble damages: If a tenant is charged $2,500 in broker fees in violation of FARE Act, they can sue for $7,500 (three times the fee)
• Class action exposure: Multiple tenants charged broker fees can file class actions. A landlord with 10 violations ($25,000 in illegal fees) faces potential treble damages of $75,000 plus attorney fees for an entire class
• Attorney fees: GBL § 349 allows courts to award attorney fees to the winning plaintiff, which can range from $10,000 to $50,000+ in residential housing cases
• No cap: Unlike some statutory penalties, GBL § 349 damages are uncapped

Enforcement Agency: NYC Department of Consumer and Worker Protection

DCWP is the primary enforcement agency for FARE Act violations in New York City. They investigate complaints through:

• Online complaint portal: Tenants file complaints directly on DCWP’s website; the agency then investigates
• Post-lease follow-up: Some tenants report payment to brokers as part of move-in disclosures or lease reviews
• Proactive audits: DCWP staff monitor rental websites and advertisements for FARE Act violations
• Attorney General coordination: The NY Attorney General’s office pursues larger or systematic violations

When DCWP finds a violation, they typically issue a Notice of Violation (NOV) demanding:

• Payment of civil penalties (usually $1,000–$5,000 per violation)
• Restitution to affected tenants
• Correction of the violating practice (removal of fee language from ads, lease amendments, etc.)
• Documentation of corrective measures

Failure to respond to an NOV or to pay penalties can result in court proceedings, liens on property, or referral to the Attorney General for civil action.

Practical Compliance Checklist for Self-Managing Landlords

Here is a step-by-step compliance checklist to ensure your rental operations comply with the FARE Act:

Before Listing a Property

• Review your broker agreement. Confirm that it caps commission at one month’s rent and is in writing. If you have an older agreement (pre-2024) that references tenant-paid fees, amend it immediately.
• Draft a written fee agreement. Have a lawyer review it. Include explicit language: “Landlord shall pay all brokerage commissions. Tenant shall not be charged any brokerage fee, commission, or related compensation.”
• Audit your rental advertisements. Review every listing on your website, Zillow, StreetEasy, Craigslist, or any other platform. Search for language like “broker fee split,” “tenant pays broker,” “commission to be negotiated,” or similar. Remove all such language.
• Create a template lease addendum. If you use a standard lease, add a clause stating: “Landlord, not Tenant, shall pay all brokerage commissions in connection with this lease. Tenant shall not be charged any broker fee.” This protects you if a tenant-side broker later claims a fee is due.

During Tenant Recruitment

• Affirmatively disclose broker fee responsibility in every advertisement. Best practice: Include a sentence like “Broker commission paid by landlord. No fees charged to applicants.” This both complies with FARE Act and signals professionalism to tenants.
• Communicate fee structure to tenant-side brokers in writing. When a broker brings you a prospective tenant, send an email confirming: “Landlord agrees to pay a commission of [X] in connection with the lease of [property address]. No fees will be charged to the tenant. Please confirm your agreement to these terms.” This creates a paper trail and prevents later disputes.
• Do not negotiate fee-sharing with tenants or brokers. Phrases like “we can work something out” or “the tenant might cover half” are invitations to FARE Act violations. Your response should always be: “Landlord pays the full commission.”

At Lease Signing

• Ensure the final lease includes the broker fee disclosure. A standard clause: “Landlord shall pay all broker commissions related to this lease. Tenant shall not owe any broker fee, commission, or related charge.”
• Do not accept cash or informal payments from tenants. Even if a tenant offers to “reimburse” a broker fee or pay a “finder’s fee,” decline. Any such payment violates FARE Act.
• Maintain a signed copy of your fee agreement with the broker. If DCWP or a tenant later disputes what fees were promised, you need written proof that you limited the broker’s commission to one month’s rent.

After the Lease Begins

• Monitor tenant communications. If a tenant contacts you claiming they were charged a broker fee by a third party, take it seriously. Document the claim and investigate.
• Retain all broker agreements and payment records. Keep copies of commission checks, broker statements, and fee arrangements for at least 6 years (the statute of limitations for consumer protection claims).
• Respond promptly to DCWP inquiries. If DCWP investigates a complaint, respond within the deadline (typically 10 business days). Provide documentation that you complied with FARE Act.

Common Scenarios and FARE Act Compliance

Scenario 1: A Tenant-Side Broker Brings You an Applicant

Situation: A broker representing a prospective tenant contacts you. They ask, “What’s your fee structure?” or “Will you split with my broker?”

Compliant response: “Landlord pays a brokerage commission of [one month’s rent]. No fee is charged to the tenant. I will provide this in writing.”

What NOT to say: “The tenant usually covers half.” “Let’s see if the tenant will pay your commission.” “We can negotiate.”

Documentation: Send an email to the broker and your own broker (if you have one) confirming the fee structure. Keep copies.

Scenario 2: A Tenant Asks if They Can Pay the Broker Fee Directly to Avoid Using Your Broker

Situation: A prospective tenant says, “I have my own broker. Can I just pay them directly instead of you using a broker?”

Compliant response: “No. The landlord is responsible for paying all brokerage commissions under New York law. You will not be charged any broker fee. If you work with a broker, I will pay them directly from the rental proceeds.”

Why this matters: The FARE Act prohibits tenants from paying brokers ANY fee, including voluntarily or as a convenience. Allowing a tenant to “handle” broker fees is a violation.

Scenario 3: You Agree to a Commission, But the Broker Later Claims It Was Supposed to Be Higher

Situation: You agree to pay a broker one month’s rent ($2,000) in writing. After the lease is signed, the broker claims you verbally agreed to 1.5 months’ rent and demands an additional $1,000.

Your response: “Our written agreement specifies one month’s rent. That is the FARE Act limit, and I am not obligated to pay more.”

Why documentation matters: A written fee agreement protects you from exactly this scenario. Without it, the broker might sue you or claim the tenant promised to cover the difference (creating a FARE Act violation).

Scenario 4: You Self-Manage and Have Never Used a Broker

Situation: You lease your units directly to tenants without a broker.

FARE Act impact: Minimal. If you do not use a broker, you have no broker fee obligation. However, you should still disclose in your lease and advertisements that no broker fee will be charged (to prevent tenants from assuming one is owed).

Example lease language: “Landlord and Tenant have arranged this lease directly, without a broker. No broker commission or fee is owed by either party.”

The Intersection of FARE Act and Other NYC Rental Laws

Relationship to the Real Property Law § 443 (One-Month Cap)

The FARE Act works in tandem with RPL § 443. § 443 was enacted in 2019 and capped the fee a landlord could pay to one month’s rent. The FARE Act (2024) added a second layer: it prohibits tenants from paying ANY fee, regardless of amount. Both statutes now apply:

• § 443: Limits what a landlord can pay a broker (one month’s rent max)
• FARE Act: Prohibits what a tenant can pay (zero dollars)

If you violate either, you face penalties under both. A landlord who charges a tenant $3,500 in broker fees (on a $2,500/month unit) violates both FARE Act and § 443.

Relationship to Rent Stabilization and Market-Rate Leases

The FARE Act applies equally to rent-stabilized apartments and market-rate apartments. There is no exemption for stabilized units. If you manage a rent-stabilized building and use a broker, you must pay the commission, not the tenant.

Additionally, broker fees cannot be recovered by raising rent on stabilized units in any way (e.g., through an illegal “broker cost pass-through”).

Relationship to Security Deposit and Fees Laws

The FARE Act is separate from security deposit law (RPL § 220) and junk fee prohibitions. While the FARE Act prohibits broker fees, landlords can still legally collect security deposits and other allowed charges (application fees, lease renewal fees, late fees, etc.) as long as they comply with their own statutory limits. However, the FARE Act is stricter than other fee laws: there is no amount of broker fee that is legal to charge a tenant.

FAQs: FARE Act Questions Self-Managing Landlords Ask

Q: I signed a lease in 2023 that says the tenant pays half the broker commission. Is it still enforceable after January 1, 2024?

A: No. The FARE Act is retroactively applied to all leases signed before and after January 1, 2024. If a tenant signed a lease in 2023 that imposes a broker fee on them, that provision is void as of January 1, 2024. You cannot enforce it. Moreover, if you attempt to collect a broker fee from that tenant after the FARE Act’s effective date, you violate the statute. Best practice: Amend the lease immediately and send the tenant a written notice confirming the fee is waived.

Q: What if a tenant agrees in writing to pay a broker fee after January 1, 2024?

A: The agreement is unenforceable and violates FARE Act. The statute prohibits tenants from paying broker fees, period. Even if the tenant signs a document saying they agree to pay, the agreement is void under New York law. If you accept the payment, you violate FARE Act. The tenant can sue for treble damages under GBL § 349.

Q: Can I reduce the rent by an amount equal to the broker commission I pay, to effectively shift the cost to the tenant?

A: No. This is a prohibited workaround. If a landlord advertises a unit at $2,500/month, agrees to pay a broker $2,000, and then tells the tenant they will only pay $2,500 (or charges $2,000 in “fees”) to recoup the broker cost, this is an indirect violation of FARE Act. The substance of the transaction—shifting broker fee burden to the tenant—matters more than the form (rent reduction vs. explicit fee). Courts and DCWP look at the economic effect, not the label. Do not attempt this.

Q: I use an online platform to list my apartments. The platform takes a fee (e.g., StreetEasy premium listing). Is that a FARE Act violation?

A: No. Fees you pay to listing platforms (Zillow, StreetEasy, Craigslist, etc.) for advertising or premium services are not brokerage commissions and are not subject to FARE Act. You can charge these costs to yourself as the landlord. However, you cannot pass these costs to tenants in the form of an “advertising fee” or “listing fee.”

Q: I am a small landlord (2 units) with no broker. Do I need to disclose anything about broker fees in my lease?

A: Best practice: Yes. Include a brief clause: “No broker commission or fee is owed by Tenant in connection with this lease.” This protects you if a tenant later claims they understood a fee would be charged. It also demonstrates that you are aware of and complying with FARE Act. While the FARE Act may not strictly require disclosure when no broker is involved, disclosure is a sign of good faith compliance and protects you from misunderstandings.

How LeaseBase Helps You Stay FARE Act Compliant

Managing broker relationships, fee structures, and tenant disclosures across multiple units can be complex, especially if you are self-managing. LeaseBase’s compliance engine flags broker fee language in lease templates and advertisements before you use them, reducing the risk of inadvertent violations. Our lease operations tools also maintain a central repository of broker agreements and fee records, making it easy to provide documentation to DCWP or defend against complaints.

For portfolios with multiple units, LeaseBase’s portfolio management features let you standardize broker fee disclosures across all listings and properties, ensuring consistency and reducing the chance of violations across your portfolio.

Summary: FARE Act Compliance in 3 Steps

1. Write it down. Have a written broker agreement that caps commission at one month’s rent and explicitly states that the landlord, not the tenant, will pay all fees.

2. Disclose it broadly. In every advertisement, every initial communication with a broker or tenant, and in the final lease, disclose that the landlord pays broker fees and the tenant will not be charged.

3. Document compliance. Keep copies of broker agreements, payment records, lease amendments, and communications with brokers. If DCWP investigates, you can demonstrate that you complied with the law.

Non-compliance is expensive. A single violation can expose you to $5,000 in civil penalties plus treble damages under the Consumer Protection Act, which can easily exceed $10,000 to $30,000 per violation. For a small landlord, even one FARE Act violation can be financially devastating. The cost of compliance—a written agreement and transparent disclosure—is near zero.