NYSAR prevails in lawsuit against Department of State

On April 9, 2021, the Supreme Court of the State of New York, County of Albany, published the decision in the lawsuit NYSAR and others filed against the Department of State (DOS) in February 2020.  The court ruled in favor of  NYSAR’s position that the Tenant Protection Act (TPA) does not apply to a landlord’s agent being paid commission by a tenant.  As such, a landlord’s agent may continue to collect commissions from the tenant.

In February 2020, DOS issued guidance addressing the Tenant Protection Act (TPA).  One of the items included prohibiting a landlord’s agent from collecting a commission from a tenant.  Upon receiving the guidance, NYSAR and other interested parties filed a lawsuit requesting that the enforcement of the guidance be stayed until such time as the court issues a final decision.  On February 10, 2020 the court granted our request, and all enforcement was stayed pending the outcome of the lawsuit.

In the April 9 decision, the court emphasized that the TPA did not specifically prohibit the collection of commissions by a landlord’s agent.  The court looked at the legislative intent of the TPA and found that the bill sponsor in the NYS Senate stated: “We’re eliminating application fees and limiting fees for background checks and other costs landlords sometimes impose before even agreeing to rent an apartment.”  The court concluded that based on the sponsor’s statement, the prohibition of additional fees related to pre-negotiation fees only and not to broker commissions.

The court also discusses that “broker’s commissions” are never referenced in the TPA.  Had the legislature intended for “broker’s commissions” to be a part of the TPA, it would have expressly included the term rather than “fees” generally.

The court determined that the TPA does not apply to a landlord’s agent being paid commission by a tenant.  NYSAR members acting as a landlord’s agent may continue to collect commissions from a tenant.

A copy of the decision can be found here.

NYSAR members with legal questions about any licensed activity can contact NYSAR’s Legal Hotline.  The Legal Hotline is an exclusive member benefit to NYSAR members and is available Monday-Friday, 9:00a.m.-4:00p.m. at 518-436-9727.