Who Pays Realtor Fees for Rentals in NY?

Realtor fees in rental transactions represent payments for the services of licensed real estate professionals who facilitate the leasing process. Understanding who is responsible for these fees, especially in New York, can often be complex for both renters and landlords. This financial aspect is a common inquiry due to its impact on the overall cost of securing a rental property. The various roles brokers play and the evolving legal landscape contribute to this complexity.

Understanding Brokerage Roles in Rentals

Real estate professionals involved in rental transactions assume distinct roles. A landlord’s agent, also known as a listing agent, represents the property owner and works to find a suitable tenant for their listed property. Their primary fiduciary duty is to the landlord, aiming to secure favorable lease terms.

Conversely, a tenant’s agent, sometimes referred to as a renter’s agent, represents the prospective tenant. This agent assists the tenant in locating suitable rental properties, scheduling viewings, and negotiating lease terms on their behalf.

In some situations, a single broker may act as a dual agent, representing both the landlord and the tenant in the same transaction. This arrangement requires the informed written consent of both parties involved, as the broker owes a duty of fairness and honesty to both, despite representing potentially conflicting interests.

Determining Payment Responsibility for Broker Fees

Generally, the party who hires a real estate broker is responsible for paying their fee. This principle guides who ultimately bears the cost of broker services in rental scenarios. If a landlord engages a broker to find a tenant for their property, the landlord typically pays the broker’s commission. These are often advertised as “no-fee” or “owner-paid” listings, indicating the tenant will not be charged a broker fee.

Conversely, if a tenant actively hires their own broker to assist them in their apartment search, the tenant is responsible for paying their agent’s fee. This arrangement ensures the tenant receives dedicated representation throughout the rental process. The fee compensates the tenant’s agent for services such as property searches, coordinating viewings, and assisting with application preparation.

The landscape of broker fees in New York has undergone significant changes. Historically, tenants often paid the landlord’s broker fee, even without directly hiring that broker. While the New York Department of State (NY DOS) attempted to prohibit landlord’s agents from collecting fees from prospective tenants in 2020, this guidance was challenged and ultimately blocked by a New York State Supreme Court ruling in 2021. This ruling effectively reinstated the ability for landlord’s agents to charge tenants.

Further legislative action has since reshaped this dynamic in New York City. The Fairness in Apartment Rental Expenses (FARE) Act, passed by the New York City Council in November 2024 and effective June 11, 2025, prohibits brokers who represent landlords from charging broker fees to tenants. Consequently, as of August 2025, tenants in New York City are generally not required to pay a broker fee unless they have explicitly hired their own broker to represent their interests.

It is important for all parties to clarify fee responsibilities in writing before engaging services, as broker fees are often negotiable. While the FARE Act applies specifically to New York City, the situation outside of New York City in other parts of New York State may still follow the 2021 court ruling, allowing landlord’s agents to charge tenants if agreed upon.

Other Rental Costs and Legal Limits

Beyond potential realtor fees, prospective tenants in New York encounter several other costs when securing a rental property. These include application fees, security deposits, and typically first and last month’s rent. These are distinct from any broker fees and are subject to specific legal limits.

Application fees cover the costs associated with processing a rental application, such as background checks and credit checks. In New York, these fees are legally capped at $20 per applicant. Landlords are required to waive this fee if the applicant provides their own recent background check or credit report conducted within the past 30 days.

Security deposits serve as a financial safeguard for landlords to cover potential damages or unpaid rent at the end of a lease term. In New York, security deposits are limited to no more than one month’s rent. Landlords must keep security deposits in an interest-bearing account in a New York State bank.

Upfront payments also include the first month’s rent and, in some cases, the last month’s rent in advance. These payments, along with application fees and security deposits, comprise the initial financial outlay for a tenant.