Who Pays The Broker Fees In New York City Rentals?
We all had to face having to pay the broker's fees when searching or moving into our new homes. These fees usually incorporate a large sum of money along with the security deposit that you have to pay along with other small charges. This was a huge inconvenience for tenants who had additional charges to pay. Who pays the broker fee when renting after all? The broker's fees were usually borne by the tenants in New York City, unlike the rest of the country where the fees are borne by the landlords themselves. However, The Department of State made a new rule in the late weeks of January 2020, which basically helped to upend the New York state market in apartments. Read on to find out more.
An age-old practice in New York
It was a common practice in New York, where tenants had to pay the broker's fees when moving to a new apartment or home. These fees would generally include large sums of money and would prove to be too expensive for some people, with costs ranging from $2500 and even above. This rule has been ended by the New York City Department of State in January 2020, when they passed a bill, which amended the year-old practice.
Amended at last
New Yorkers now will no longer face exorbitant prices when searching or moving into apartments. The broker fees will now be borne by the landlords themselves. This led to a sweeping impact in the New York real estate markets as well as residents. Usually, New York landlords would hire brokers, who would then have their properties listed on the market and engage prospective clients for the purpose of leasing or renting out the home.
Prospective tenants would then have to pay the broker's fee, which was around 12% to 15% of the rent for a year. Other expenses faced by the tenants would include deposits for security, rent for the first month, and other kinds of costly expenses. In June of 2019, the DOS released a statement where the security deposit was capped to just a month's rent. The application fees for brokers was made to $20. However, during that time it was unclear whether the fees paid would be borne by the tenants or the landlords. However, from the latest statement released by the DOS, tenants now have to pay no more than $20, which includes both background checks and credits alike. Now, the landlords themselves will pay the broker fees when renting.
This essentially means that if the landlord has hired the broker, the cost of the broker's fees has to be paid by them. the only way in which a tenant in New York City has to pay the broker's fees is if they hire the broker directly themselves. This move, according to the Housing Justice for all, is targeted to end New York's problem of homelessness. By eliminating the broker's fee and limiting the deposit for security, 92,000 homeless people in New York will now be able to find a home.
According to a long time real estate attorney, Petro Zinkovetsky, the new regulations are fair, logical, and long overdue. The fees are borne by the landlords themselves in the rest of the United States and the world. The rules over here were just an abnormality.
Is the $20 application fee applicable for tenants or landlords?
The $20 fee is paid by the landlord themselves and any other charges associated with the broker is also limited to $20. Thus, if the broker shows you the property, the maximum amount he/she can charge from you is $20.
Under what circumstances would the broker charge me?
You would only get charged by the broker if you hired the broker yourself, to look at properties.
What should I do if my broker is charging me more than $20?
If you had not hired the broker yourself, then there is no way the broker can charge you more than $20. If you are being asked to pay more than that, you contact the local law enforcement agencies and they can guide you through the procedure. Your rights are covered under the Housing Security and Tenants Protected Act, which was modified in 2019.