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NYC Broker Fee Ban 2025: The FARE Act Explained for Landlords, Tenants, and Brokers

Introduction

    On June 11, 2025, the Fairness in Apartment Rental Expenses (FARE) Act took effect, reshaping who pays broker fees in residential rentals. For years, tenants were charged thousands of dollars in commissions, even when the broker worked for the landlord.

 

    Now, that practice is illegal. Under the FARE Act, the party who hires the broker must pay the broker. If the broker represents the landlord, the landlord must pay the broker’s fee.

 

    This guide breaks down what the new law means for landlords, brokers, tenants, and investors, and how to comply while maintaining profitability.

 

What the 2025 FARE Act Changes

    The FARE Act brings several key updates:

 

• Landlords Pay the Fee: If the broker represents the landlord (or is hired by the landlord’s agent), the landlord pays the broker fee – not the tenant.

 

• Tenants Still Have a Choice: Tenants can still hire their own brokers and pay them directly if they choose representation.

 

• Disclosure Requirements: All rental listings must clearly disclose all fees tenants are required to pay, including credit-check or background-check fees.

 

• Permitted Fees Remain: The law does not prohibit landlords from charging reasonable background or credit-check fees, as long as they’re properly disclosed and within legal cost limits.

 

• Prohibited Conduct: Landlords cannot:
  • Require tenants to hire a specific broker or dual agent.
  • Misrepresent who the broker represents in order to shift the fee.

 

How the FARE Act Impacts NYC Landlords

    For landlords who rely on brokers to fill vacancies, the FARE Act means absorbing higher leasing costs, typically equivalent to one month’s rent per unit. This shift could impact profitability, especially for smaller property owners or those with high turnover rates. However, savvy landlords can adapt by highlighting the "landlord pays broker fee" aspect in listings to attract more tenants faster, potentially reducing vacancy periods.

 

Key Compliance Steps for Landlords

    To avoid fines (starting at $500 for violations, escalating to $1,000 for repeats), follow these steps:

 

1. Review Your Brokerage Agreements: Confirm who hired the broker and update all new contracts to reflect fee responsibilities.
2. Update Leases: Add a “Tenant Fee Disclosure” section itemizing any legitimate fees (e.g., credit checks).
3. Disclose Fees in Listings: Every online or printed listing must specify who pays the broker fee and list any other tenant charges.
4. Retain Documentation: Keep signed fee-disclosure acknowledgments for at least three years as required by law.
5. Don’t Bundle Fees: Broker fees and screening fees must be itemized separately to ensure transparency.

 

    To minimize costs, landlords can negotiate bulk-listing agreements for portfolios or large buildings, securing lower commissions or performance-based fees. Emphasize “Landlord Pays Broker Fee” in marketing materials to stand out in NYC's rental listings.

 

What NYC Tenants Should Know

    Tenants benefit most from the FARE Act – no more paying broker fees for landlord-hired agents. However, it’s still legal for landlords to charge screening fees:

 

• Credit Check Fee Limit: Up to $20 per applicant (per NY state law).
• Background Check Fee: Permissible if disclosed and consistent with actual cost.

 

    Tenants should always request written disclosures of all costs before signing and verify that no hidden broker fees are included. If something seems off, file a complaint with the NYC Department of Consumer and Worker Protection (DCWP).

 

Compliance Checklist for Landlords and Brokers

• Clearly disclose all fees to tenants, including lawful screening fees.
• Keep written disclosure forms for at least three years.
• Ensure marketing materials reflect correct fee responsibility.
• Train property managers on compliance and record-keeping.
• Avoid forcing tenants to use a particular broker or dual agent.

 

Conclusion

    The 2025 FARE Act is reshaping New York’s rental landscape. For the first time, broker fees follow representation, not tradition. Landlords who adapt quickly will minimize risk, maintain compliance, and gain a competitive marketing edge.

 

 

If you’re a landlord, investor, or broker needing help updating leases or brokerage agreements under the new law, contact Elad Michael, Esq. — an NYC real-estate attorney specializing in landlord-tenant and investment compliance.