A New York City real estate brokerage, accused of imposing exorbitant fees on prospective renters, has agreed to settle with a payment of $260,000 in penalties, as announced by Governor Kathy Hochul on Thursday after a 17-month state investigation.
Following the investigation, state regulators determined that City Wide Apartments, based in Manhattan, had charged numerous tenants seeking rental apartments excessively high broker’s fees. One notable instance included a $20,000 commission for securing a $1,725 a month rent-stabilized apartment on the Upper West Side, initially reported by the New York Post in 2022.
Governor Hochul said that the exorbitant fees charged by the company violated state law by significantly surpassing the reasonable value of the services provided. As part of the settlement, the brokerage will pay $50,000 in fines and an additional $210,000 to tenants who were subjected to overcharging.
In a statement, Hochul emphasized the unfairness of such excessive broker fees, especially amidst a housing crisis in the state. She said, “With our state staring down a housing crisis, excessive broker fees are not just unfair – they’re a threat to hard-working families looking to call New York home.”
In New York City, prospective tenants are commonly required to pay broker’s fees in addition to security deposits and the first month’s rent to secure a rental property, even if the broker’s services are rarely utilized in the apartment search or as an intermediary with the landlord.
Efforts to curb or eliminate broker fees in cases where tenants do not hire them have faced opposition from the real estate industry. Trade groups within the industry successfully challenged a cap on broker’s fees for tenants included in a 2019 overhaul of state rent laws.
A City Council bill aiming to limit broker’s fees to one month’s rent failed to gain traction in 2019. Last year, Councilmember Chi Osse introduced a measure proposing that the party hiring the broker—either the tenant, landlord, or property manager—should be responsible for the fee. However, real estate trade groups, including the Real Estate Board of New York, oppose the measure, expressing concerns that it could lead to higher rents.
Typically assessed at 15% of the annual rent, or approximately one month’s rent, broker’s fees have been on the rise alongside increasing rents across the city. Osse expressed satisfaction with the state’s action against what he described as predatory practices, noting that such issues could be largely prevented by legislation mandating that the party hiring the broker bears the fee.
