Rental commissions are back — for now

Temporary restraining order issued after REBNY challenges state rule

REBNY President Jim Whelan (Credit: iStock; Whelan by Anuja Shakya)
REBNY President James Whelan (Credit: iStock; Whelan by Anuja Shakya)

Rental commissions are back!

A New York judge granted a temporary restraining order Monday afternoon, halting a Department of State guidance barring tenant-paid rental commissions from going into effect. The guidance, circulated Feb. 4, would have blocked tenants from paying rental commissions in cases where the landlord hired an agent to market the listing.

But amid heavy backlash from rental brokers who said their livelihoods were at stake, the industry filed an Article 78 petition this morning in Albany.

In the petition, filed by the Real Estate Board of New York, New York Association of Realtors and a dozen New York brokerage firms, lawyers argued that the guidance wreaked “havoc and confusion” on the industry. The suit claimed the guidance was an “unlawful, erroneous, and arbitrary” interpretation of New York’s rent law passed in June.

In a statement, REBNY and NYSAR said they look forward to resolving the issue in court “in the weeks ahead.” In the meantime, agents will be able to “do business in the same way they did prior to last week’s DOS memo without fear of discipline by the DOS.”

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The plaintiffs argued that rental agents would suffer irreparable injury — the loss of income and in some cases, jobs — unless the restraining order were issued. The next step in the process would be a hearing on whether a preliminary injunction is justified. It was not immediately clear if the Cuomo administration would appeal Monday’s decision.

In an email to members, REBNY said it would be back in court March 13. In the meantime, agents can go back to business as usual.

“Landlord’s agents can collect a commission from a tenant until further notice,” the email said.

Write to E.B. Solomont at eb@therealdeal.com

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