The Cuomo administration says the real estate industry only has itself to blame for a pending ban on broker fees charged to tenants.
The ban stems from a set of guidance, released by the state in February and currently in contest in court, that was solicited by the Hudson Gateway Association of Realtors’ general counsel, according to an affidavit filed by a Department of State attorney David Mossberg, who provides legal advice related to state laws. And, the lawyer says the DOS’ interpretation of the law is shared by lawmakers and at least one prominent real estate figure: Barbara Corcoran.
Mossberg’s affidavit and related exhibits appear to be at the center of the state’s defense against the real estate industry’s Article 78 petition seeking to overturn the ban.
The industry argues that the state’s guidance — related to the Housing Stability & Tenant Protection Act of 2019 — came “out of the blue” and represents “an illegal exercise of legislative power” that would cost brokers their jobs and drive up rents.
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Mossberg’s affidavit and his correspondence with HGAR’s John Dolgetta were filed last week in Albany County Supreme Court.
“Commencing on October 11, 2019, John Dolgetta, Esq. and the Hudson Gateway Association of Realtors requested an opinion from the Department,” wrote Mossberg. “In response to, inter alia, HGAR’s request, the Department issued an update.”
Dolgetta and the HGAR declined to comment.
Mossberg goes on to justify the state’s guidance by arguing that regulators’ interpretation is in line with the goals of the 2019 rent law. As evidence, he pointed to media interviews State Sen. Julia Salazar and Barbara Corcoran gave after the guidance was released.
The senator told Gothamist and The Real Deal that the broker-fee ban was in line with the letter of the law.
While Corcoran, who founded residential brokerage the Corcoran Group in 1973 , told Fox 5 that stopping tenants from having to pay a landlord’s agent’s broker fee was what lawmakers were after with the 2019 rent law.
“They wanted to eliminate the entrance fee to get an apartment here in New York City,” she said during the interview. She did not respond to a request for comment for this story.
A spokesperson for the Corcoran Group, which is one of the industry petitioners fighting the state’s interpretation, distanced the company from its founder, noting that she has not been affiliated with the firm since 2002.
“We continue to believe that the guidance from the Department of State misconstrues the 2019 Tenant Protection Act,” the spokesperson said in a statement. “This misinterpretation would harm not only hardworking real estate agents, but also the very tenants the law is intended to protect.”
Mossberg also noted in his affidavit that when the DOS first issued guidance in Sept. 2019 regarding changes to the rent laws, the Real Estate Board of New York — which is leading the industry’s lawsuit against the state — expressed gratitude to his team.
Claude Szyfer, a partner at Stroock representing REBNY, said the exchange was taken out of context and will be addressed, “among other points,” in the petitioners’ reply due Oct. 30.
The state’s response to the real estate industry’s petition has been a long-time coming. The case has been postponed four times so far, and the parties’ court date is now scheduled for Nov. 6.
Until then, the industry’s temporary restraining order preventing the broker-fee ban remains in place, meaning tenants can still be on the hook to pay landlords’ broker fees.