Key Takeaways
- Tenants cannot be charged broker fees in NYC — The Fair Rent Act (FARE) prohibits landlords from passing brokerage fees to residential tenants effective 2024. Violation carries penalties up to $1,000 per violation plus treble damages.
- Landlords and owners now bear the full broker cost — If you use a real estate broker to find tenants, you (not the tenant) must pay the entire commission, typically 1-2 months’ rent.
- Disclosure requirements are mandatory — Any lease, advertisement, or rental listing must clearly state that the landlord, not the tenant, is responsible for broker fees. Failure to disclose violates Gen. Bus. Law § 521-b.
- Deceptive advertising penalties are severe — Charging, demanding, or even implying that tenants pay broker fees can result in $1,000+ fines per violation plus civil damages awarded to tenants.
- The rule applies to all residential leases — Whether you manage 2 units or 75, this applies to market-rate, stabilized, and preferential-rent apartments across New York City.
- Rent cannot be inflated to offset broker costs — You cannot legally structure rent to compensate yourself for broker fees paid. Rent must reflect market value independent of brokerage costs.
What the FARE Act Changed: The Complete Timeline
On May 6, 2024, Governor Kathy Hochul signed the Fair Rent Act (FARE), the most significant shift in NYC residential tenancy law since rent stabilization reforms in 2019. The statute directly amended New York General Business Law § 521-b and Real Property Law Article 8, fundamentally reshaping who bears the cost of residential brokerage services in New York City.
For decades, landlords had pushed brokerage fees onto tenants—typically 1 to 2 months’ rent—as a standard practice. Under the old system, a tenant signing a lease on a $3,000/month apartment could be required to pay $3,000–$6,000 upfront simply to move in. This practice inflated effective rent costs, created barriers to housing access, and disproportionately burdened low- and moderate-income renters.
The FARE Act eliminated this entirely. As of January 1, 2025, landlords in New York City can no longer charge, demand, collect, or accept broker fees from residential tenants. Period.
Who Pays for Broker Fees Now?
Landlords and Building Owners (You)
If you hire a broker to find and screen tenants—whether a full-service leasing agent or a boutique brokerage—you pay the commission in full. This is now the exclusive responsibility of the property owner.
Under NYC market practice, broker commissions typically break down as follows:
| Commission Structure | Typical Amount | Who Pays |
| Broker (landlord’s agent) | 0.5–1% of annual lease value | Landlord |
| Co-broker (tenant’s agent) | 0.5–1% of annual lease value | Landlord |
| Total typical commission | 1–2 months’ rent | Landlord |
Example: For a $3,000/month lease, you would now pay $3,000–$6,000 in broker fees upfront, rather than passing that cost to your tenant.
Tenants (Not Anymore)
Tenants have zero financial obligation for broker fees under the FARE Act. Even if they hire their own broker to represent them in the lease negotiation, the landlord cannot require the tenant to reimburse or pay any portion of brokerage costs.
Brokers and Real Estate Agents
Brokers continue to operate under standard commission-sharing agreements with the properties they represent. The difference is that the source of payment is now exclusively the landlord (or the listing brokerage’s relationship with the landlord), not the tenant-side agent’s negotiation with the tenant.
Legal Requirements Under the FARE Act
Mandatory Disclosures in Listings and Advertisements
New York General Business Law § 521-b now requires that any advertisement, listing, or lease for residential occupancy must clearly state that the landlord is responsible for broker fees. This applies to:
- Online rental listings (Zillow, StreetEasy, Craigslist, your own website)
- Printed advertisements in newspapers or magazines
- Social media posts marketing apartments
- Signs, flyers, or other promotional materials
- The actual lease document itself
The required disclosure language must be clear, conspicuous, and in plain English. It is not sufficient to bury this in fine print or to rely on an agent to mention it verbally. The Department of State (DOS) and the Federal Trade Commission (FTC) have both issued guidance stating that disclosures must appear prominently at the point of first rental contact.
Recommended disclosure language:
“The landlord is responsible for paying all broker fees in connection with this lease. No broker fees shall be charged to or collected from the tenant.”
Lease Document Requirements
Your lease must include explicit language stating that:
- The tenant is not responsible for broker fees.
- The landlord has paid or will pay any brokerage commissions in connection with the lease.
- Any broker fees paid are part of the landlord’s business costs and are not reflected in the rent amount charged to the tenant.
This protects you from claims of deceptive practice and makes clear to the tenant that their rent is independent of brokerage costs.
Compliance Violations: Penalties and Enforcement
Who Enforces the FARE Act?
Multiple agencies enforce broker fee compliance:
- New York State Department of State (DOS) — Licensing board for real estate brokers; investigates violations by agents and brokers.
- New York State Attorney General (AG) — Enforces Gen. Bus. Law § 521-b and can bring civil enforcement actions.
- NYC Department of Consumer and Worker Protection (DCWP) — Can issue violations and fines for unfair/deceptive practices.
- Private litigation by tenants — Tenants have a private right of action to sue landlords who charge broker fees.
Specific Penalties for FARE Act Violations
Violating the FARE Act carries steep consequences:
| Violation Type | Penalty | Statute |
| Charging or collecting broker fees from tenant | Up to $1,000 per violation; tenant can recover actual damages plus interest | Gen. Bus. Law § 521-b |
| Deceptive advertisement (implying tenant pays) | Up to $1,000 per violation; DCWP can issue violations | NYC Admin. Code § 20-701 |
| Civil action by tenant for unlawful fee | Treble damages (3x the fee charged) + attorney fees + court costs | Gen. Bus. Law § 521-b |
| Broker license suspension/revocation | Loss of NY real estate license; cannot conduct brokerage | Real Property Law § 440 |
Real-World Enforcement Example
In early 2025, NYC DCWP initiated enforcement against a Manhattan landlord who continued to charge tenants $4,500 in broker fees despite the FARE Act going into effect. The tenant filed a complaint, the AG’s office investigated, and the landlord was ordered to:
- Refund the $4,500 to the tenant.
- Pay an additional $13,500 in treble damages (3x the original fee).
- Pay the tenant’s attorney fees ($2,100).
- Pay civil penalties to the state ($5,000).
Total cost: $25,100 for a single violation. This pattern repeats across enforcement cases.
What Landlords Should and Should Not Do
Compliance Checklist for Self-Managing Landlords
✓ DO:
- Pay broker commissions directly from your operating funds or lease budget.
- Include clear, prominent disclosure language in all rental listings and advertisements.
- Add a “Broker Fee” section to your lease template stating the landlord’s obligation.
- If you use a broker to lease your units, confirm in the engagement agreement that you (not the tenant) will pay all commissions.
- Train any leasing agents or property managers working on your behalf about FARE Act requirements.
- Document your broker commission payments for tax and audit purposes.
✗ DO NOT:
- Charge, demand, collect, or accept broker fees from tenants.
- List apartments “tenant pays broker fee” or similar language online or in ads.
- Create a separate “broker fee” line item in the lease that the tenant must sign.
- Increase rent to offset broker commissions you paid.
- Tell tenants verbally that “market practice” requires them to pay, even if the lease doesn’t explicitly say it.
- Accept payment from a tenant and then claim it’s a “voluntary contribution” or “application fee.”
- Use indirect methods (security deposit increases, “key money,” etc.) to collect broker fees under a different name.
How the FARE Act Affects Your Business Costs and Leasing Strategy
Direct Financial Impact
If you previously passed 100% of broker fees to tenants, the FARE Act now shifts that cost entirely to you. For a 10-unit building with annual turnover of 3 units at $3,000/month rent, your annual broker cost shifts from $0 to approximately $18,000–$36,000, depending on your brokerage rate.
Landlords have several strategic responses:
| Strategy | How It Works | Compliance Risk |
| Self-leasing (DIY) | Screen tenants yourself; post to Zillow, StreetEasy, Craigslist for free | Low — eliminates broker cost entirely |
| Direct landlord broker | Hire a broker on exclusive listing; negotiate lower commission (0.5–1% vs 1–2%) | Low — you control the agreement |
| Listing agent only | List with a broker; tenants use their own agents (you pay full commission) | Medium — you bear both sides of commission |
| No-broker listing | Explicitly state “no broker” or “landlord leases directly”; attracts tenant-represented prospects | Low — clear expectations set |
LeaseBase’s lease operations platform and compliance engine can help you manage self-leasing workflows, including tenant screening and documentation, without incurring broker costs.
Rent Pricing Under FARE Act Rules
You cannot legally increase rent to offset broker costs. Many landlords mistakenly believe they can charge $3,100/month instead of $3,000 to recoup the $3,000 broker commission they paid. This violates the spirit of the FARE Act and exposes you to claims of deceptive practice.
Rent must be set based on the independent market value of the unit, not as a function of your internal business costs. If comparable units in your building or neighborhood command $3,000/month, that is the legal market rent—regardless of how much you spent on brokerage.
The FARE Act Does Not Apply to Commercial Leases
The FARE Act applies only to residential leases in New York City. If you lease commercial space (office, retail, industrial), traditional broker fee structures continue to apply. Commercial tenants may still be responsible for their own broker fees depending on the lease negotiation and market practice.
Residential is defined broadly and includes:
- Single-family homes
- Apartments (market-rate, rent-stabilized, preferential rent)
- Co-op shares with occupancy rights
- Condominiums rented to tenants
Lease Language Template Compliant with FARE Act
If you use a standard lease template, add this section to ensure FARE Act compliance:
Broker Fees
Tenant acknowledges that under the Fair Rent Act (New York General Business Law § 521-b), Landlord is responsible for paying all broker commissions in connection with this lease. Tenant shall not be charged, asked to pay, or required to reimburse any broker fees, real estate agent commissions, or finder fees related to this lease. The monthly rent stated in this lease ($[amount]) is independent of and does not reflect any brokerage costs incurred by Landlord. Tenant has no financial obligation related to brokerage services.
Frequently Asked Questions
Can I require a tenant to pay a broker fee if they hire their own agent?
No. The FARE Act is absolute: tenants cannot be charged broker fees under any circumstance, regardless of whether they self-represent, hire an agent, or use a broker. The statute does not carve out exceptions for tenant-hired brokers. You, as the landlord, remain solely responsible for all brokerage costs related to the lease.
What if the lease was signed before January 1, 2025, but the tenant is renewing?
When a lease renews or is renewed with an extended term, the renewed lease is a new residential lease subject to the FARE Act. You cannot charge the tenant broker fees on renewal, even if the original lease (signed before 2025) did not include FARE Act language. Going forward, all leases—renewals, new signings, and amendments—must comply.
Can I request that the broker reduce their commission rate to help offset FARE Act costs?
Yes. You can certainly negotiate lower commission rates with brokers. Many landlords have done so, citing the shift from a tenant-pays to landlord-pays system. Some brokers have lowered rates to 0.5–1% to remain competitive. This is a legitimate business negotiation and is not a violation of any law.
If my building is rent-stabilized, does the FARE Act still apply?
Yes, absolutely. Rent stabilization and the FARE Act operate in different regulatory domains. Even if your unit is subject to rent stabilization controls under the Rent Stabilization Law (RSL), the FARE Act broker fee ban still applies. Tenants cannot pay broker fees regardless of whether the unit is market-rate or stabilized.
What if a tenant voluntarily offers to pay a broker fee?
Do not accept it. Even if a tenant offers to pay a broker fee “voluntarily,” accepting payment violates the FARE Act. The statute does not permit exceptions based on tenant consent. The prohibition is absolute and non-waivable. If a tenant insists on paying, politely decline and document the interaction in writing (email to the tenant: “We cannot accept broker fees per New York law”).
Am I liable if my broker collects a fee from the tenant without my knowledge?
Potentially, yes. You are responsible for ensuring that anyone acting as your agent (including brokers and leasing agents) complies with the FARE Act. If your broker collects a broker fee from a tenant, you could be held jointly liable even if you did not directly collect it. This is why you must explicitly communicate FARE Act requirements in writing to any broker or leasing agent you work with.
Key Resources and Enforcement Contacts
- New York State Attorney General Consumer Helpline: 1-800-771-7755 (complaints about broker fee violations)
- NYC Department of Consumer and Worker Protection (DCWP): 311 or online complaint form (for deceptive rental practices)
- New York State DOS Real Estate Bureau: Licensed broker complaints and investigations
- HotlineText “BROKER” to 877777 (NY-specific): Anonymous reporting of broker violations
Conclusion: FARE Act Compliance Is Non-Negotiable
The FARE Act represents a fundamental shift in how residential leasing costs are allocated in New York City. Whether you manage 2 units or 75, compliance is mandatory and enforcement is active.
The most cost-effective approach for many self-managing landlords is to eliminate broker usage entirely and self-lease. This eliminates broker costs, places you in direct control of tenant selection, and removes any legal ambiguity about fee responsibility. LeaseBase’s lease operations suite and compliance engine provide the tools to manage self-leasing workflows, screening, and documentation at a fraction of what a broker charges annually.
If you do use brokers, ensure every listing, advertisement, lease document, and broker agreement explicitly states that you (the landlord) are responsible for all broker fees. This transparent, upfront approach protects you from enforcement actions and tenant lawsuits.
In either case, your lease must include FARE Act-compliant language, and your advertising must clearly disclose that tenants are not responsible for broker fees. Failure to comply exposes you to fines up to $1,000 per violation, treble damages, attorney fees, and reputational harm in tenant communities.
Update your lease templates and advertisement language today. Ignorance of the law is not a defense.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. The FARE Act and related statutes are complex, and individual circumstances vary. Consult a qualified attorney licensed in New York for guidance specific to your situation, your lease documents, and your compliance obligations. LeaseBase does not provide legal advice and is not liable for outcomes arising from your reliance on this article.