Pol calls foul on workaround to $20 rental application fee cap

Assembly’s Rosenthal deems brokers’ use of dual agency agreements “clearly an attempt to circumvent the law”

Linda Rosenthal (Credit: Getty Images)
Linda Rosenthal (Credit: Getty Images)

When state lawmakers reconvene next month, they will take a hard look at a loophole some brokers are using to avoid New York’s new $20 rental application fee cap.

Earlier this month, attorney Lisa Faham-Selzer and one of clients, Moses Stark, revealed how dual agency agreements could allow agents and brokerage firms to continue collecting application fees above $20, as they did before Albany’s legislation took effect over the summer. They said the agreement allows brokers to provide better service to tenants.

But State Assemblymember Linda Rosenthal took exception to the workaround, first reported by The Real Deal.

“I think it’s stupid to try to circumvent the law and then brag about it,” said Rosenthal. “But the law is the law and you can’t just invent excuses to circumvent [it].”

She said she was “sure” that Faham-Selzer’s dual agency agreement would come up in pre-session discussions among lawmakers.

The lawmaker, whose district includes Manhattan’s Upper West Side, parts of Clinton Hill and Hell’s Kitchen, expressed doubt over the use of dual agency, asking whether an agent initially hired by a landlord could truly represent a tenant’s interests as well.

Rosenthal noted that she’s aware of the pain the $20 cap has inflicted on real estate agents. She said she’s been taking meetings with brokers who’ve told her their businesses are struggling. It is through such conversations, she said, that changes could be made.

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“No one wants to hurt brokers,” said the legislator. But she emphasized that Faham-Selzer’s strategy is “clearly an attempt to circumvent the law.”

“They think going around the law is the right thing to do?” she added. “They clearly, or she doesn’t, understand how the current Albany works.”

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Armed with a majority in both chambers for the first time in a decade, state Democrats last session pushed through a series of bills opposed by real estate interests, most notably June’s sweeping changes to the rent law. With all legislators up for election next year, real estate insiders are preparing for the worst while retooling lobbying strategies and hoping for the best.

New York State Senator Brian Kavanagh, who chairs the Senate’s Committee on Housing, Construction and Community Development, failed to comment.

Write to Erin Hudson at ekh@therealdeal.com