The Continuing Sage of Dual Agency in the NYS Residential Rental Market

June 11, 2021


T.W. On Si Episode 17 – Dual Agency Residential Saga Comes to an End (S)

We finally have a decision on the issue of dual agency in the residential real estate rental market here in NY State…the saga has ended…

In case you are joining us mid-saga…

Just a quick reminder of where we have been with this issue…Over a year ago–in February, 2020, the NY State Dept of State (DOS) issued a ruling that prohibited a landlord’s real estate agent from collecting brokerage commissions from tenants–effectively ending a long tradition of dual agency in the residential rental market.   

This ruling has no effect on commercial properties and/or leasing–the focus is on the residential real estate market.

What had been the long standing tradition was that a landlord would hire a real estate sales person to market and find tenants for their rental properties.     While the landlord hired the real estate agent, it was the tenant that paid the real estate commission, not the landlord.

For SI, it was and is typically 1 -months’ rent for the commission.   However in parts of Brooklyn and in Manhattan, the real estate commission is typically 15% of the annual rent.  

The DOS ruling would have changed the residential real estate market dramatically, but within days, a judge in Albany put an injunction on the DOS ruling until the Court could hold hearings.     So since February, 2020, the DOS ruling has been on hold.

Now, finally, a decision has been made by the NY State Supreme Court, which effectively favors the real estate brokerage industry and declared that the DOS ruling was an abuse of discretion and bans the DOS from enforcing or applying any rule that would prevent a real estate licensee from receiving payment from a prospective tenant.   

So, tradition of dual agency–where the landlord hires the real estate agent, and the tenant pays their fee, remains in effect and the tradition continues.