Two years ago, City Wide Apartments agent Ari Wilford came under fire for allegedly charging nearly $20,000 for a broker fee on the Upper West Side. The state went after him and the brokerage and on Thursday announced a settlement.
City Wide agreed to a $260,000 penalty that includes restitution, the New York Post reported. The agreement comes more than a year after New York’s Department of State began scrutinizing the broker fee.
The Manhattan-based brokerage’s settlement includes a $50,000 fine and $210,000 in restitution to dozens of tenants. The state found that City Wide, which didn’t comment on the settlement, overcharged several tenants.
What sparked the investigation was the $20,000 fee Wilford sought for brokering a lease for an Upper West Side apartment. The one-bedroom unit was listed at $3,750 per month, the Post previously reported, but Wilford claimed it was rent-stabilized and could be leased for $1,725 if a tenant paid the hefty fee.
There’s no limit on broker fees. It’s against protocol, however, to charge commissions out of sync with the work involved. A tenant negotiated Wilford down $500, but still paid $19,500.
Tenants and prospective tenants later revealed other instances where Wilford demanded extraordinary broker fees for rentals. Brokers typically charge either 15 percent of a year’s rent or one month’s rent for their services.
But Wilford is hardly the only broker who has charged far more for rent-stabilized apartments.
“Some rent-stabilized apartments come to market that are $1,000 a month and some brokers are charging $10,000 to get that apartment,” Andrew Barrocas of the brokerage MNS told The Real Deal last year. “In every industry, there are bad people.”
Barrocas said he charges the standard fee. But for tenants, paying a high, one-time fee to land a rent-stabilized apartment pays off over time, because rent increases are limited to what the Rent Guidelines Board allows each year, renewals are automatic and leases can be passed on like heirlooms.
Wilford, who was not singled out in the state’s announcement about the settlement, still lists City Wide Apartments as his employer on LinkedIn, but there’s no other indication he still works for the brokerage. City Wide cooperated with the investigation and vowed to change its practices, according to state officials.
“For those who think they can take advantage of tenants seeking housing, you can rest assured the department will hold them accountable,” Secretary of State Robert Rodriguez said in a statement.
— Holden Walter-Warner
Read more
Commercial
New York
New York state scrutinizing $20K broker fee for rent-stabilized unit
Commercial
New York
Broker pockets $20K fee for rent-stabilized UWS pad
Residential
New York
Rental brokers lay out case against Council bill