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group of New York City real estate brokers are suing the city over a new law that shifts costly broker fees away from tenants and onto landlords or property owners. The lawsuit, filed by the Real Estate Board of New York (REBNY) and other industry groups, aims to block the Fairness in Apartment Rentals Act (FARE), which passed with a veto-proof majority in the City Council last month.

    The law requires that the person hiring the broker pay the fee, rather than the prospective tenant. Supporters hope it will ease the city's housing affordability crisis, while opponents argue it could lead to rent spikes and harm brokers and landlords. The lawsuit claims that the law will cause irreparable harm to consumers and industry professionals, and violates constitutional guarantees of free speech and contract rights.

    The Manhattan federal court lawsuit could halt the law from taking effect next July, when it is scheduled to go into place. Experts say that while the industry has a high burden in court, the merits of their case are on their side. However, attorney Altagracia Pierre-Outerbridge calls the suit's arguments "long shots" and an "uphill fight against City Hall."

    To block the law from taking effect, REBNY's attorneys must prove that it would cause irreparable harm to brokers. The city has roughly 20 days to respond to the lawsuit. Mayor Eric Adams previously expressed skepticism surrounding the FARE Act, suggesting that property owners could pass the cost of hiring a broker onto tenants on the lease.

    The law is part of a broader effort by the city to address its housing affordability crisis. New York City is one of the only cities where landlords can hire a broker and pass the hiring cost onto the tenant, which has contributed to an all-time high average upfront cost of $13,000 per rental transaction this year, according to StreetEasy.