Compliance guide

The FARE Act: who pays the broker fee

For decades, the standard NYC rental fee model put a one-month-or-more broker fee on the tenant — even when the broker worked for the landlord. The FARE Act changed that. As of June 2025, a broker hired by the landlord generally can't pass that fee to the tenant. The statutory presumption is now landlord-paid. Here's what the law requires and how brokerages stay on the right side of it.

What the FARE Act is

The Fairness in Apartment Rental Expenses Act (the FARE Act) is a New York City local law that took effect on June 11, 2025. It reassigns responsibility for the residential broker fee away from the tenant in the common case where the broker is working on the landlord’s behalf, and it adds up-front disclosure requirements so a renter knows what they will owe before they apply.

The Act is enforced by the NYC Department of Consumer and Worker Protection (DCWP). It applies to residential rentals in New York City.

The core rule

A landlord-hired broker can't charge the tenant the fee.

If a broker is engaged by, or is acting on behalf of, the landlord — the party who published the listing or hired the agent — that broker may not collect a broker fee from the prospective tenant. The cost of the landlord’s broker is the landlord’s to bear.

The practical effect: the “15% of annual rent” or “one month’s rent” broker fee that historically landed on the tenant in a typical listing now defaults to the landlord. The statutory presumption is that the fee is landlord-paid.

Who pays, and when

The right way to think about it is: the party who hired the broker pays the broker. The FARE Act doesn’t ban broker fees — it bans shifting the landlord’s broker fee onto the tenant.

Landlord-hired broker → the landlord pays the fee. This is the default and the statutory presumption.
Tenant-hired broker → the tenant may still pay their own broker, because that broker is providing a service the tenant chose to engage.
No broker → no broker fee, obviously.

The edge case that demands care is a fee the tenant agrees to pay. A tenant-paid (or split) arrangement is lawful only when there is a genuine, written tenant-broker agreement reflecting that the broker was working for the tenant — not a landlord-hired broker repackaging the fee.

How Urbero models this.

Every deal in Urbero records who paid the broker fee, defaulting to landlord — the statutory presumption. Setting a deal to tenant-paid or split is gated: it requires a brokerage administrator and an explicit FARE Act acknowledgment, and it writes an audit-log entry. The frictionless path is the compliant one; the exception is the one that takes a second set of eyes.

CalculatorFARE Act broker-fee calculatorWork out who is responsible for the broker fee in a given deal and what the tenant can lawfully be charged.

Disclosure and other tenant charges

Beyond reassigning the fee, the FARE Act requires transparency about what a renter will owe. In broad strokes:

Listings and advertisements must disclose any fees a tenant will be responsible for, so renters can compare the true cost of a unit up front.
A tenant must be given an itemized statement of the fees they are being asked to pay before signing.
Fees that the law assigns to the landlord cannot be relabeled and passed through to the tenant under another name.

The Act does not eliminate legitimate, separately authorized charges (for example, an application or background-check cost is governed by its own statewide rules). What it targets is the landlord’s broker fee being charged to the tenant.

Enforcement and exposure

The FARE Act is enforced by NYC DCWP. A renter who is improperly charged a landlord’s broker fee can file a complaint, and violations can carry penalties. For a brokerage, the operational risk is less about a single fee and more about a pattern: charging tenants the landlord’s fee as a matter of practice creates repeat exposure across every deal.

This is exactly why recording the fee-payer posture on every closed deal — with the landlord-paid default and a gated, audited exception — turns a compliance question into a clean paper trail you can show on demand.

Common scenarios

Landlord lists with your brokerage

You’re the landlord’s broker. You cannot charge the renter your fee — the landlord pays it. The deal records as landlord-paid by default.

A renter hires you to find them an apartment

Here the tenant engaged you directly. A tenant-paid fee can be lawful, but you need a written tenant-broker agreement establishing that relationship — and you record the deal as tenant-paid with that acknowledgment, not as a default.

An open listing where both sides have brokers

Each side’s broker is paid by the party who hired them. The landlord’s broker can’t bill the tenant; the tenant’s broker can be paid by the tenant under their agreement. Document the arrangement so it’s clear which broker each side engaged.

Frequently asked questions

When did the FARE Act take effect?: June 11, 2025. It applies to residential rentals in New York City and is enforced by NYC DCWP.
Does the FARE Act ban all broker fees?: No. It bans charging the tenant for the landlord’s broker. A tenant who hires their own broker can still pay that broker under a written agreement. The default and statutory presumption is that the fee is landlord-paid.
Can a tenant ever agree to pay a broker fee?: Yes, but only in a genuine tenant-broker relationship documented in writing — not where a landlord-hired broker simply asks the tenant to cover the landlord’s fee. Treat a tenant-paid or split arrangement as the exception that needs documentation and sign-off.
What happens if a tenant is charged the landlord’s fee anyway?: The renter can file a complaint with NYC DCWP, and the charge may be subject to penalties. The safest practice is to default every deal to landlord-paid and require an explicit, audited exception for anything else.