An Albany judge on Monday issued a temporary restraining order halting the Empire State’s new lightning-rod rule that renters can no longer be charged broker’s fees.
The ruling by Justice Michael Mackey came after the influential Real Estate Board of New York and other industry honchos, including big-name brokerages like the The Corcoran Group and Sotheby’s Realty, filed a lawsuit against the Department of State on Monday.
The temporary ban means brokers can, for now, continue collecting hefty commissions from tenants when they rent a residence.
REBNY and the New York State Association of Realtors declared in a statement that it also means “that thousands of hardworking, honest real estate agents across New York State can do business in the same way they did prior to last week’s DOS memo without fear of discipline by the DOS.”
The DOS blindsided the real estate industry last week when it issued a guidance to rent legislation passed last year that said landlords must now pay broker’s fees — not tenants.
The rent law passed in June said that tenants couldn’t be charged more than $20 in fees when applying for an apartment.
But it was unclear whether the $20 cap also applied to broker’s fees — and the DOS declared that it did.
The suit against DOS claims the department engaged in “improper rulemaking” when it issued the Feb. 4 guidance that was “devoid of logic, arbitrary and capricious, an abuse of discretion.”
“The DOS’s unlawful, erroneous, and arbitrary interpretation … has had an immediate and devastating impact on the rental real estate market statewide,” the filing claims.
Mike McKee, treasurer of Tenants PAC, defended the DOS’ interpretation of the law.
“Requiring tenants to pay a broker’s fee has been an abuse for years and years and years,” McKee told The Post. “This has been a scam. It’s about time it ended.”
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