The city’s new law banning broker fees will go into effect tomorrow, after a federal judge shot down a real estate lobby lawsuit to block the ban.
Judge Ronnie Abrams ruled Tuesday that a federal lawsuit challenging the Fairness in Apartment Rental Expenses Act was mostly rooted in policy disagreements — not constitutional questions.
“Plaintiffs’ discontentment with the Act, however, stems not from its effects on their constitutional rights, but from a fundamental disagreement with its underlying policy,” Abrams ruled.
Her decision tossed all but one claim from the lawsuit, and denied a request to pause the law as the case plays out.
The FARE Act — passed in City Council with a veto-proof majority of 42-8 on Nov. 13 — prohibits agents representing property owners from charging prospective renters a “broker fee.”
The lawsuit, filed a month later by the Real Estate Board of New York, a broker’s association and various property groups, claimed that banning broker fees would “destroy” the rental market.
Abrams said the suit was asking “the court to act as a ‘superlegislature’” to nix laws they disagree with.
“The court declines that invitation,” Abrams wrote, adding that the “remedy is through the political process, not in court.”
But while the judge said the act could result in higher prices for landlords, they were better positioned to absorb the cost by increasing rents.
“Tenants, by contrast, cannot pass the cost of brokers’ fees to landlords,” she wrote.
REBNY President James Whelan said he was “disappointed” that their motion to pause the law was kiboshed.
“New Yorkers will soon realize the negative impacts of the FARE Act when listings become scarce, and rents rise. We will continue to litigate this case as well as explore our avenues for appeal.”
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