New York State’s Response to Industry Lawsuit on Broker Fee Ban Delayed

The uncertain future of broker fee payments will be prolonged until at least June.

On Friday, the office of New York Attorney General Letitia James requested an extension to respond to the real estate industry’s Article 78 petition until May 1 and the industry agreed to the delay, according to court documents and a statement sent by the Real Estate Board of New York. The parties will now meet in court on June 12.

The petition was filed last month in Albany County Supreme Court after the Department of State issued guidance that effectively banned tenants from paying broker fees for an agent hired by the landlord. It marked a reversal of the long-standing practice of tenants footing the bill in New York City’s rental market.

REBNY, the New York Association of Realtors and 12 brokerage firms called state regulators’ guidance an “unlawful, erroneous, and arbitrary” interpretation of New York’s rent law passed in June and quickly appealed to the courts to halt and overturn the DOS’ interpretation.

Less than a week after the state guidance was issued, a New York judge granted a temporary restraining order that barred the state’s guidance on tenant-paid broker fees from going into effect.

The parties were next due to appear in court on March 13, until the two sides reached an agreement on Friday to delay proceedings.

“Attorneys for the government and the industry recognize the complexity of the issues raised in the matter and agree that additional time is necessary for preparation of court documents,” REBNY president Jim Whelan said in a statement.

The temporary restraining order halting the DOS guidance will remain in place until the June court date.

Write to Erin Hudson at ekh@therealdeal.com