NEW YORK CITY – The New York real estate industry gathered in arms on Monday to secure a temporary injunction against the Department of State guidance barring tenant-paid broker commissions from a landlord-retained real estate agent, but many are asking how long will the injunction last, could the court deem it as justified since it is not law but a litigation position? Leni Morrison Cummins, a real estate attorney at Cozen O'Connor, tells GlobeSt.com

Since the passing of the Housing Tenant and Protection Act in 2019, the market has experienced a slowdown. The legislation clamped down on the popular strategy of transitioning rent-stabilized units to market-rate housing and set a standardized apartment application fee to $20, which significantly tempered investor enthusiasm. However, with the Department of State guidance of a rental-fee ban has flushed everyone in the industry to take a closer look at the legislation, Cummins said.

"[The new guidance] is not the promulgation of the law, it's a litigation position from New York State," she said. "We can kind of rely on it, but anyone challenging the guidance document it may not procedurally work because it's not the promulgation of the law. Ultimately, the underlying legislation needs to be addressed."

And although the injunction granted by the Albany County Supreme Court is in place, there is the possibility that Gov. Andrew Cuomo will appeal it in the short-term or that when the plaintiff, who includes the Real Estate Board of New York and New York Association of Realtors along with several other prominent local brokerages return to court, may not get the intended outcome, which could mean a new broker-fee economy.

"Anytime you get a landlord paying more, it ends up baked into rental prices," Cummins said. "Rental prices will rise because of this and it will have a disproportionate effect on one-off landlords. Large landlords have in-house brokers or can establish economies of scale. Small landlords will have to account for 15 percent or one month rent into increased expenses."

Instant Insights /

New York Real Estate Is Business as Usual and Vigilant

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