Governor Kathy Hochul announced a settlement with New York City-based real estate brokerage firm City Wide Apartments, Inc. after a state investigation found that the firm charged excessive broker fees – in one instance collecting over $20,000 in additional fees – to tenants looking for housing.
“With our state staring down a housing crisis, excessive broker fees are not just unfair – they’re a threat to hard-working families looking to call New York home,” Governor Hochul said. “This settlement doubles down on my administration’s crackdown on deceptive business practices and starts the process of making dozens of families whole, and I will continue fighting to protect New York consumers and make our state more affordable and more livable.”
Under the terms of the settlement, City Wide has agreed to pay $260,000 in penalties and restitution, including a $50,000 fine and $210,000 in restitution to dozens of tenants. The agreement builds on Governor Hochul’s consumer protection and affordability agenda, announced as part of the Governor’s State of the State, to protect New York consumers and help keep hard-earned money in New Yorkers’ pockets.
New York State Secretary of State Robert J. Rodriguez said, “Excessive brokers’ fees add substantial costs to the already high price of renting property. The New York Department of State recognizes the need for fair and transparent practices in the real estate industry and this settlement is a testament to our commitment to protecting the rights of tenants. For those who think they can take advantage of tenants seeking housing, you can rest assure the Department will hold them accountable.”
The New York State Department of State’s Licensing Services Division, which licenses real estate sales agents and brokers, launched an investigation into alleged wrongdoings by City Wide, beginning in August 2022 following a report by the New York Post. The investigation revealed the brokerage violated the Real Property Law, by collecting one or more real estate commissions containing excessive fees which did not reasonably relate to legitimate services actually performed on behalf of tenants.
City Wide and its agents fully cooperated with DOS’ investigation and have committed to changing their business practices and how commissions are structured moving forward.
A broker’s fee must represent charges for actual services provided. Real estate licensees are obligated to act with honesty in their dealings with the public and cannot charge exorbitant commissions that have no reasonable relationship to the work involved in earning the commission.
When working with licensed agents and brokers, the Department reminds prospective tenants:
- To confirm the agent and firm are properly licensed by checking our website at https://dos.ny.gov/licensing-services;
- Commission fees are negotiable;
- Remember to get a receipt for any funds paid;
- Where possible, provide all fees with traceable funds; and
- Never pay a commission to the name of the licensed salesperson (commissions should always be paid to the name of the real estate company).
