Curbed: State lawmakers promise ‘heavy penalties’ for landlords who violate rent laws

State lawmakers say they will introduce a bill to slap brokers and landlords who violate New York’s recently enacted rent regulations with “heavy penalties.”

Assembly members Linda Rosenthal and Harvey Epstein are in the midst of crafting legislation that would impose fines “in the thousands” to force compliance with reforms of the state’s rent laws passed in June. The legislative move comes after THE CITY reported that a gray area in the law allows the real estate industry to circumvent a provision that caps the charge for application fees at $20.

Rosenthal told Curbed Friday that “it’s really not surprising, I just think it’s disgusting” and says several renters who have been charged “exorbitant application fees in the hundreds” since the sweeping reforms were passed have reached out to her office. The new legislation strives to force brokers and landlords to comply with the new law or face hefty fines, says Rosenthal.

“In a civil society one should expect that people and cooperations obey the law. That they shouldn’t have to assign a consequence to not obeying the law, but it seems like I was too optimistic,” Rosenthal told Curbed. “If the way to fix that is to levy heavy penalties then that’s what we’ll do.”

The June bill, known as the Housing Stability And Tenant Protections Act of 2019, strengthened existing rent laws already on the books and also extended some of those laws governing rent-regulated tenants to market-rate renters. The new legislation offers an array of protections to tenants but does not impose penalties on those who exceed the cap on application fees.

But Carl Hum, general counsel with the Real Estate Board of New York (REBNY), told Curbed that the law is not black and white. “There’s no mention of brokers in there. By a strict reading of the law brokers are excluded,” said Hum. “Rather than come out with these statement bills, clear up the legislation.”

Hum pointed to the “ambiguities” in the law to reinforce REBNY’s argument that the rent reforms, which were introduced on a Tuesday and signed into law three days later, were passed too quickly and did not have the benefit of a public hearing. It is ultimately up to the New York State Department of State to interpret the bill—the agency says it is currently reviewing the legislation.

But it won’t be until at least 2020 that any changes to the law can occur when the next legislative session in Albany reconvenes.

In the meantime, city lawmakers are making their own moves to crack down on the hefty upfront fees renters have little choice but to pay. City Councilmember Keith Powers introduced a polarizing bill in February that would cap the brokers’ fees an agent hired by a landlord can collect from renters at one month’s rent. This would put the kibosh on fees of 12 to 15 percent of the annual rent that have long been de rigueur in the real estate industry.

Powers stressed that the goal of the bill is to lighten the burden on cash-strapped New Yorkers when searching for a new apartment.

“The bill has had one intention: To make it more affordable to rent an apartment in New York City by asking one thing—for the landlords to pay for the people that they hire,” Powers said at a June City Council hearing on the bill where hundreds of brokers flocked to City Hall in protest of the bill waving signs scrawled with “Don’t cap my income” and “Agents are tenants too.”