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NYC brokers charging exorbitant fees forced to pay $260K in penalties
By
David Brand
Published Jan 25, 2024
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By
David Brand
Published Jan 25, 2024
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A New York City real estate brokerage accused of charging eye-popping fees to would-be renters agreed to pay $260,000 in penalties following a 17-month state investigation, Gov. Kathy Hochul said on Thursday.
State regulators found the Manhattan-based company City Wide Apartments charged dozens of tenants looking to rent apartments exorbitant broker's fees — including a $20,000 commission for a $1,725 a month rent-stabilized apartment on the Upper West Side, first reported by the New York Post in 2022.
Hochul said the unreasonable fees violated state law by far exceeding the actual services rendered. The company will pay $50,000 in fines and another $210,000 to dozens of tenants who were overcharged, she said.
“With our state staring down a housing crisis, excessive broker fees are not just unfair – they’re a threat to hard-working families looking to call New York home,” Hochul said in a statement.
City Wide Apartments did not immediately respond to a phone message or email seeking comment.
New York City apartment hunters are typically forced to pay broker’s fees on top of security deposits and first month's rent to secure a place — even though they rarely hire the broker to show them the apartment or act as an intermediary with the landlord.
Efforts to limit or eliminate broker fees when tenants don’t hire them have failed in the face of opposition from the real estate industry, with trade groups successfully suing to overturn a cap on broker’s fees for tenants included in a 2019 overhaul to state rent laws.
A City Council bill limiting broker’s fees to one month’s rent also failed to gain traction in 2019.
Last year, Councilmember Chi Osse introduced a measure that would require the person or company that hired the broker — either the tenant, landlord or property manager— to foot the bill.
Real estate trade groups, including the Real Estate Board of New York, oppose the measure and say it could lead to higher rents.
Brokers’ fees are typically assessed at 15% of the annual rent, or roughly the equivalent of one month’s rent. Those extra costs are surging as rents rise citywide.
Ossé told Gothamist he was “thrilled to see the state taking action against predatory practices.”
“Issues like this would be prevented almost entirely by a law mandating that the broker fee is paid by whichever party hires the broker,” he added.
Tagged
new york city
Kathy Hochul
housing
manhattan
David Brand
David is a reporter covering housing for Gothamist and WNYC. Got a tip? Email [email protected] or Signal 908-310-3960.
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