On November 13, 2024, the Fairness in Apartment Rentals Act (FARE) (the Bill) was approved by the New York City Council (City Council) prohibiting the imposition or collection of any fee or commission for the rental of residential real property. The Bill will also require landlords to disclose the fees that a tenant is required to pay in the rental listing and rental agreements. Violations of the Bill would subject a person to civil penalty. The passing of the Bill by a 42 to 8 majority of the City Council vitiates a veto, notwithstanding that Mayor Eric Adams has been a critic of the Bill. Accordingly, the Bill will take effect 180 days after it becomes law.

The Bill will put an end to the practice of residential brokers passing their brokerage fees through to tenants. Such fees are usually 15 percent of the annual rent payable during the first year of the applicable lease and have typically been paid by tenants as part of the leasing process. While the intended purpose of the Bill is to reduce amounts payable by residential tenants, it is likely that one of the unintended consequences of the Bill will be that some landlords will increase the rent charged to residential tenants in order to recoup amounts that will now be paid by landlords in the leasing process, to the extent that the rent stabilization laws (if applicable) permit such an increase.

Key Requirements

The Bill prohibits a listing agent or broker (Landlord's Agent) in connection with the procurement of a tenant to rent residential property, including a unit held in a condominium or cooperative form of ownership (Residential Real Property), from imposing any fees on a tenant related to such rental services (other than fees associated with background or credit checks). In addition, the Bill mandates that, "Every listing related to the rental of residential real property shall disclose in such listing in a clear and conspicuous manner any fee to be paid by the prospective tenant for the rental of such property."

The Bill further requires that prior to the execution of a rental agreement, the landlord or Landlord's Agent must provide the prospective tenant with an itemized, written disclosure of any and all fees that the tenant must pay to the landlord or to any other person in connection with such rental, together with a short description of such fees. Such disclosure must be signed by the tenant prior to execution of the rental agreement and retained by the landlord for a period of three years. A copy of this disclosure must also be provided to the tenant for their records. Note that the disclosure of fees is not limited to brokerage fees, and landlords must now disclose all fees imposed on tenants as part of the execution of the lease.

Fines and Penalties for Non-Compliance

Any party that violates (i) the provisions of the Bill regarding the payment of fees shall be subject to civil penalties of not more than $1,000 for the first violation and not more than $2,000 for each subsequent violation occurring within a two-year period, or (ii) the disclosure requirements of the Bill shall be subject to civil penalties of not more than $500 for the first violation and not more than $1,000 for each subsequent violation occurring within a two-year period.

In a court proceeding alleging a violation, the Department of Consumer and Worker Protection may seek an order imposing all civil penalties and requiring restitution of any fees charged.

In addition, any person may bring a civil action, with respect to any violation of the Bill, in any court of competent jurisdiction, and such court may order compensatory, injunctive and declaratory relief.

The Bill was approved by a 42 to 8 vote in the City Council, which indicates that the City Council would override any veto of the Bill by Mayor Eric Adams.