NEW YORK (BLOOMBERG) -- A key real estate industry group is suing New York City over its law that requires landlords to pay fees for the brokers they hire.
The Real Estate Board of New York and other groups said in a lawsuit filed Monday in federal court in Manhattan that the rule will “wreak havoc on the New York City rental markets and unleash a host of unintended consequences.”
Last month, the New York City council passed the measure that would require landlords to pay for their own brokers instead of passing those costs onto tenants. The longstanding practice in the city’s rental market added on to renters’ move-in costs.
The real estate board says the law violates their First Amendment rights to free commercial speech by discouraging them from advertising “open listing” apartments. It also claims the law violates the contracts clause of the US Constitution.
Nicholas Paolucci, a spokesman for the city’s Law Department, said it would “review the case once served and respond accordingly.” Chi Ossé, the City Council member who sponsored the bill, said the act is a “crucial step” toward making the city more fair for working-class residents and the lawsuit is an attempt to undermine the voices of city residents.
Carl Hum, REBNY’s general counsel and senior vice president, said the legislation is “bad policy” that will also raise rents and make it harder for tenants to find housing.
“We look forward to our day in court,” Hum said in a statement.
REBNY succeeded in 2020 in overturning a previous attempt at regulating the payment of brokers fees.