T
he Real Estate Board of New York (REBNY) has filed a lawsuit against the city to block a new law requiring landlords to pay rental brokers' fees rather than passing them on to tenants. The Fairness in Apartment Rental Expenses Act, approved by the City Council in November, allegedly violates the First Amendment rights of brokers and landlords by discouraging the publication of rental listings.

    Under the FARE Act, if a broker advertises a rental, they are assumed to have been hired by the landlord, and tenants cannot be forced to pay the broker's fee. However, landlords who hire brokers themselves often pay lower fees, around 8 percent of the annual rent. REBNY claims that the new law will lead to less transparency in the rental market as listings disappear from websites.

    The lawsuit argues that the FARE Act wrongfully infringes on commercial speech and private contracts, violating the U.S. Constitution's Contract Clause and state law. The trade group alleges that the law will "raise rents and make it harder for tenants to find housing" while also infringing upon constitutional guarantees of free speech and contract rights.

    REBNY is joined by other plaintiffs, including the New York State Association of Realtors and several brokerages, in challenging the FARE Act. The lawsuit seeks an injunction to prevent the law from taking effect until the legal challenge concludes.