Trade associations and real estate brokerages announced Friday they will file a lawsuit against the New York Department of State on Monday, Feb. 10 over new guidance that would shift the burden of paying rental brokers commissions onto landlords. 

The changes came in the wake of significant rent reforms passed by the New York State legislature in 2019. In a clarifying document, the New York Department of State wrote on January 30 that “No, a landlord’s agent cannot be compensated by the prospective tenant for bringing about the meeting of the minds.”

In the wake of the decision, which stunned many in the industry, the Real Estate Board of New York (REBNY), New York State Association of Realtors (NYSAR) and various brokerages announced an intention to sue the New York Department of State. The lawsuit was first reported by The Real Deal. 

“We are asking the court to recognize that the Department of State illegally overstepped its role in issuing its new Guidance on rental brokerage commissions,” REBNY President James Whelan said in a statement. “The announcement of this new rule without warning has caused widespread confusion and havoc among dedicated real estate agents and the clients they serve. The sudden decision and the way it was made public was harmful to thousands of hardworking New Yorkers.”

NYSAR, the Albany-based trade association for Realtors in the state, is also joining the lawsuit and expressed deep concern over both the content and the way it was delivered to the public.

“Real estate brokers provide valuable services to the consumer and the property owners and they should be fairly compensated,” Jennifer Stevenson, president of NYSAR, said in a statement. “These regulations will severely and wrongly impact the incomes of hard-working real estate professionals.”

“It is unconscionable that a serious disruption of the marketplace has occurred without any industry input or even proper review by the State Board of Real Estate,” Stevenson added. “We will use every resource available to us to fight against these unreasonable and punitive regulations.”

In an email announcing the intention to file the lawsuit, REBNY did not list the brokerages involved. When asked which brokerages are participating, a spokesperson for the trade organization could not immediately clarify.

Email Patrick Kearns

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription