NYC FARE Act Broker Fee Rules: Who Pays & Landlord Compliance (2026)

What Is the NYC FARE Act and When Did It Take Effect?

On November 22, 2023, New York Governor Kathy Hochul signed the Fair Apartment Rental Environment (FARE) Act into law. The law took effect on February 1, 2024, fundamentally restructuring how brokerage fees are paid in the residential rental market.

The FARE Act directly prohibits tenants from paying brokerage fees. Instead, landlords bear 100% of broker commission costs. This represents one of the most significant shifts in New York real estate practice in decades and directly impacts how self-managing landlords budget for leasing costs.

The statute codifies this requirement in New York General Obligations Law § 17-107 and applies to:

• All residential leases for buildings with any number of units (including 1-unit and 2-unit properties)
• Market-rate apartments and rent-stabilized units
• New leases, lease renewals, and lease amendments that involve broker involvement
• Leases in all five boroughs of New York City and certain areas of Westchester and Nassau counties subject to local adoption

The law does not apply to commercial leases, owner-occupied buildings with fewer than four units (in some jurisdictions), or transactions where no licensed broker is involved.

Who Pays Broker Fees Under the FARE Act?

The Landlord Pays — Full Stop

Under the FARE Act, the landlord (property owner) is liable for 100% of broker commissions. Period. This is non-negotiable under the statute.

Previously, under the pre-FARE market practice, landlords and tenants often split brokerage fees 50-50, or tenants paid the full commission. The FARE Act eliminated this practice entirely.

What this means in practice:

• If you hire a broker to lease your unit for a standard 15% commission, you pay that 15% (not the tenant)
• You cannot include a “broker fee” or “leasing fee” in your rental listing or lease agreement and pass it to the tenant
• You cannot advertise a unit as “no broker fees” to shift the burden to tenants; this would violate the law
• Broker commissions must be paid by the landlord or their agent, not deducted from tenant security deposits or charged as move-in fees

The only exception: if you lease your unit directly without using a licensed broker, you have no broker fees to pay at all. This is why many small landlords have shifted to self-leasing since the FARE Act took effect.

What About Lease Renewals?

Lease renewals present a gray area under the FARE Act. The statute explicitly prohibits tenants from paying broker fees for initial lease execution. For renewal agreements, the law’s application depends on whether a broker is involved in the renewal process.

Key rule: If a broker is engaged to negotiate or execute a lease renewal, the same prohibition applies — the landlord pays. However, if you and your tenant negotiate a renewal directly (without a broker), no broker fees apply.

Best practice: Document in writing whether a broker is involved in your renewal transaction. If one is, communicate the fee structure in advance and ensure your lease addendum clearly states that you will pay any brokerage commission.

Legal Consequences for Violating the FARE Act

Tenant Lawsuits and Damage Awards

The FARE Act gives tenants a private right of action. If you violate the law by charging a broker fee to a tenant, the tenant can sue you in civil court for:

• Actual damages — The full amount of the broker fee the tenant was charged
• Treble damages — Three times the broker fee amount (statutory penalty for deliberate violations)
• Attorney fees and court costs — The tenant’s legal representation is paid by you
• Injunctive relief — A court order forcing compliance with the law

Example: You lease a unit and charge a tenant a $2,000 broker fee in violation of the FARE Act. The tenant sues. A court could award: $2,000 (actual) + $6,000 (treble) + $3,500 (attorney fees) = $11,500 total liability. Plus court costs and interest.

There is no cap on damages, and tenants do not need to prove intent — strict liability applies.

Government Enforcement and HPD Action

The New York City Department of Housing Preservation and Development (HPD) has enforcement authority over FARE Act violations. While HPD’s primary focus is code enforcement and illegal harassment, the agency can receive complaints about broker fee violations and may initiate investigations.

Enforcement actions can result in:

• Cease-and-desist orders
• Fines and penalties (amounts vary but are typically $1,000–$5,000 per violation)
• License sanctions against the property or landlord in the city’s rental registry
• Tenant remedies including lease cancellation or deposit refunds

Additionally, violations may trigger audits of your other rental practices, exposing you to scrutiny on lease terms, rent increase compliance, and maintenance issues.

Reputational and Business Impact

Tenants increasingly share information about landlord practices on platforms like Google Reviews, Zillow, and tenant advocacy boards. A FARE Act violation creates a lawsuit risk that damages your ability to attract quality tenants and secure future financing or investors.

What You Cannot Do Under the FARE Act

Prohibited Practices for Self-Managing Landlords

Understand exactly what the law forbids:

Practice	Legal Status	Example
Charging tenant a “broker fee”	❌ Prohibited	Lease states: “Tenant pays $2,000 broker fee at signing”
Advertising “tenant pays broker fee”	❌ Prohibited	Rental listing: “Tenant responsible for broker commission”
Deducting broker fee from security deposit	❌ Prohibited	Lease deposit $2,000; broker fee $1,000 deducted at move-in
Adding broker fee as separate “move-in cost”	❌ Prohibited	Lease addendum: “Move-in includes $1,500 leasing fee”
Charging broker fee for lease amendments	⚠️ Context-dependent	If broker negotiates amendment, fee is prohibited; if done directly, N/A
Paying broker, then billing tenant as “admin fee”	❌ Prohibited	Lease includes $1,000 “processing fee” that goes to broker

The law is written broadly to prevent workarounds. If the fee is connected to brokerage services — regardless of its name in the lease — it cannot be charged to the tenant.

What You CAN Do: Landlord Compliance Options

Option 1: Hire a Broker and Pay the Commission

You can absolutely use a real estate broker to market and lease your unit. You simply bear the cost.

Compliance steps:

• Negotiate a broker commission agreement directly with the broker (typical range: 12–15% of annual rent)
• Ensure the broker understands FARE Act requirements and does not solicit fees from tenants
• Include a clear statement in all rental listings: “Landlord pays all broker fees — no tenant payment required”
• Add language to your lease: “Any brokerage commission is paid by the landlord and is not the responsibility of the tenant”
• Keep broker engagement letters and fee agreements in your files (proof of compliance if disputed)

Budget impact: A typical 1-bedroom apartment in NYC at $2,500/month would incur a $2,500–$3,750 broker commission (annual rent × 12–15%). This is now your cost as the landlord.

Option 2: Lease Directly Without a Broker

Many small landlords have opted to self-lease since the FARE Act. This eliminates broker fees entirely.

Compliance steps:

• Market the unit yourself through your website, social media, Craigslist, or rental apps (Zillow, Apartments.com)
• Screen tenants directly or use a tenant screening service
• Conduct your own showings or coordinate with a property manager
• Draft your own lease or use a template that complies with New York law
• Document all communications and applications to create an audit trail

Compliance statement to include: “This property is leased directly by the owner. No broker fees apply.”

For self-managing landlords with 5–75 units, tools like LeaseBase can streamline tenant communication, rent collection, and compliance documentation, reducing the administrative burden of self-leasing.

Option 3: Use a Co-Brokerage or Tenant-Side Broker

Some landlords engage a tenant-side broker or co-broker arrangement where the tenant (not you) elects to hire a broker for tenant representation. In this scenario:

• The tenant pays their own broker (if they choose one) — not prohibited by the FARE Act
• You still cannot charge the tenant for brokerage services
• Clarify in your listing: “Tenant may engage their own broker at their own expense”

This is a nuanced gray area. Consult an attorney before marketing units this way, as the distinction may not be clear to tenants and can create disputes.

Lease Language and Documentation Requirements

What Must Be in Your Lease to Comply

Your lease agreement must include clear, unambiguous language about broker fees. New York law requires good faith, fair dealing, and transparency in lease terms.

Recommended lease language:

“Brokerage Fees: Any brokerage fees or commissions related to this lease are paid exclusively by the Landlord and are not the responsibility of the Tenant. Tenant shall not be charged any amount for brokerage services. This lease is subject to the New York Fair Apartment Rental Environment (FARE) Act, which prohibits tenant payment of broker fees.”

This language serves multiple purposes:

• Explicitly informs the tenant of their rights
• Protects you from claims of ambiguity if a dispute arises
• Demonstrates good-faith compliance to HPD or a court
• Reduces tenant legal exposure and defensive lawsuits

Additional documentation to maintain:

• Broker engagement letters or commission agreements (proof of who is paying)
• Rental listings and advertisements (show no mention of tenant broker fee responsibility)
• Lease addenda or amendments (clearly state broker fee allocation)
• Email communications with tenants (demonstrate transparency)
• Move-in checklists and receipts (show no broker fee deduction from deposits)

Keep these files for at least 6 years — the statute of limitations for tenant lawsuits under New York law.

Advertising Your Rental: FARE Act Compliance

How to List Your Unit Legally

Your rental advertising must be FARE Act-compliant from the first moment a prospective tenant sees it.

Required disclosures in rental listings:

• State clearly whether a broker is involved: “Landlord-listed” or “Listed with [Broker Name]”
• If a broker is involved: “Landlord pays all broker fees — tenant pays $0”
• Do not advertise “no broker fees” as a selling point (this implies tenants would otherwise pay)
• Avoid vague or misleading language like “flexible fee arrangements” or “fees negotiable”

Compliant listing example (direct lease):

“2BR/1BA in Brooklyn, $2,800/month. Available September 1. Landlord-listed — no broker involved. Move-in: First month + security deposit. Contact [your info].”

Compliant listing example (broker-assisted):

“2BR/1BA in Brooklyn, $2,800/month. Available September 1. Listed by Jane Smith Realty. Landlord pays all broker fees. Tenant move-in: First month + security deposit only. Contact [broker info].”

Non-compliant example (violates FARE Act):

“2BR/1BA in Brooklyn, $2,800/month. Tenant responsible for broker fees. Contact [info].” ❌

FAQ: NYC FARE Act Broker Fees

Q1: I signed a broker agreement before February 1, 2024. Do I have to pay the broker fee now?

A: The FARE Act applies to leases signed after February 1, 2024. If your broker agreement was executed before that date, you may have been operating under the old rules. However, if the tenant’s lease was signed after February 1, 2024, the FARE Act applies to that lease, and you cannot charge the tenant broker fees. Check your broker agreement language and consult your broker about how the transition applies to your specific situation. New agreements after February 1, 2024 must comply with FARE Act requirements.

Q2: What if I use a property manager who also leases units for me?

A: If your property manager is a licensed real estate broker and is being paid a commission to lease your unit, that is a brokerage fee under the FARE Act, and you (not the tenant) must pay it. If your property manager charges a flat management fee (for ongoing management, not leasing), that is not subject to the FARE Act. Make sure your property management agreement clearly separates leasing fees (your responsibility) from management fees (typically shared or tenant-paid under separate lease terms).

Q3: Can I increase rent to offset the broker fee I now have to pay?

A: Legally, yes — you can set rent at any market rate. However, you cannot charge a broker fee and then also increase rent as retaliation for FARE Act compliance. In practical terms, if you hire a broker, you price the unit at a market rate that accounts for your brokerage cost. You cannot charge a tenant an extra “$1,500 broker fee” on top of rent as a workaround. If you need help pricing units competitively and understanding local market conditions, tools like LeaseBase can provide analytics and comparable rent data for your market.

Q4: Does the FARE Act apply to lease renewals if I’m not using a broker?

A: No. The FARE Act prohibits tenants from paying broker fees only when a broker is involved in the lease transaction. If you and your tenant negotiate a renewal directly, no broker is involved, and no broker fee applies. Renewals are treated the same as initial leases: no broker fee can be charged to the tenant if a broker is involved; no fee applies if there is no broker.

Q5: What if a tenant claims I violated the FARE Act, but I didn’t intentionally charge them a broker fee?

A: The FARE Act imposes strict liability — intent does not matter. If a broker fee was charged to the tenant, it is a violation, even if unintentional. The tenant can still sue for actual damages plus treble damages plus attorney fees. Your best protection is clear, written documentation (lease language, broker agreements, listings) that shows you were aware of and complying with the law. If a dispute arises, respond quickly and consider settlement to avoid treble damages liability. Consult an attorney immediately if a tenant makes a FARE Act claim.

Compliance Checklist for Self-Managing Landlords

Use this checklist every time you lease a unit:

• ☐ Determine whether you will use a broker or lease directly
• ☐ If using a broker: execute a broker engagement letter and confirm in writing that you will pay all commissions
• ☐ Draft rental listing with compliant broker fee language (or statement that no broker is involved)
• ☐ Post listing on all platforms (Zillow, Apartments.com, your website, etc.) and verify no broker fee language is included
• ☐ Add FARE Act-compliant lease language prohibiting tenant broker fee payment
• ☐ Review lease with tenant and verbally confirm: “You are not responsible for any broker fees — that is paid by the landlord”
• ☐ Collect only first month’s rent, security deposit, and authorized fees (not broker fees) at lease signing
• ☐ File broker engagement letter, signed lease, and all email communications in your records
• ☐ If disputes arise with tenant about fees, respond in writing within 5 business days and offer to clarify lease terms
• ☐ For lease renewals: repeat the process above if a broker is involved; if direct negotiation, no broker fee applies

State of Broker Fee Regulation: Trends Beyond NYC

New York is not alone. Other states and localities have enacted similar broker fee restrictions:

• California: AB 1359 (2024) restricts landlord-side broker fees in certain jurisdictions
• Illinois: Chicago municipal code has adopted tenant-protection language regarding broker fees in local ordinances
• Massachusetts: Boston and Cambridge have considered broker fee caps and tenant protections

If you manage properties in multiple states, broker fee rules vary significantly. Verify the rules in each jurisdiction where you own rental property.

How to Prepare for Future Compliance Changes

The FARE Act is not the final word. New York City and State continue to regulate rental market practices.

Stay ahead of compliance changes by:

• Subscribing to New York State Department of Housing and Community Renewal (DHCR) updates
• Monitoring NYC HPD notices and enforcement guidance
• Consulting an attorney annually to review your lease and policies
• Joining landlord associations (such as the Rent Stabilization Association in NYC) for regulatory updates
• Using a compliance platform that tracks rule changes in your jurisdiction (LeaseBase’s compliance engine monitors statute updates and alerts landlords to changes affecting their portfolios)

Compliance is not a one-time checklist — it is an ongoing obligation that requires attention to new laws and enforcement trends.

Key Takeaway: The Landlord Bears Broker Fees in New York

The FARE Act represents a fundamental shift in New York’s rental market. Landlords now absorb 100% of broker commission costs, with no ability to pass fees to tenants. Violations carry steep penalties: actual damages, treble damages, and attorney fees — with no damage cap.

For self-managing landlords with 2–75 units, the practical calculus is clear:

1. Option A: Hire a broker, pay the commission (typically $2,500–$5,000+ per lease), and avoid the time burden of self-leasing.
2. Option B: Lease directly, save the broker fee, and invest time in marketing, showing, and screening tenants yourself.

Either path is compliant if you follow the documentation and disclosure requirements outlined in this guide. The key is understanding your obligations upfront and building them into your leasing process.

Use LeaseBase lease operations tools to document and track broker agreements, maintain compliant lease language, and keep audit-ready records of your broker fee compliance. For tenants managed across a portfolio, LeaseBase’s compliance engine can flag FARE Act violations and alert you to updates in New York rental law before they become legal problems.

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Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance specific to your situation. New York landlord-tenant law is complex and subject to frequent updates. Compliance requirements may vary based on your property’s location, size, and rental terms. This article reflects law as of August 2026 but does not substitute for advice from a licensed attorney licensed to practice in New York.