Real Estate Leaders Sue to Stop New York City’s Overhaul of Broker Fees

Real estate leaders in New York City filed a lawsuit on Monday seeking to halt a new law that would shift expensive broker fees from renters to landlords.

The broker fee bill became law on Friday after Mayor Eric Adams neglected to sign or veto it within 30 days as required. The new rules approved by the City Council prevent renters from being forced to pay broker fees that can cost thousands of dollars.

The lawsuit was filed in Federal District Court in Manhattan by the Real Estate Board of New York, an influential industry lobbying group. It argues that the law is unconstitutional and that it will lead to higher rents.

“It will wreak havoc on the New York City rental markets and unleash a host of unintended consequences, causing immediate and irreparable harm to the consumers it purports to protect, as well as harm brokers and landlords around the city,” the lawsuit said.

Moving into an apartment in the city can easily cost more than $10,000 in upfront costs, including a broker fee that is typically more than one month’s rent. The median rent is currently about $3,400.

The City Council passed the bill in November over the objections of real estate leaders with 42 votes — enough for a veto-proof majority to prevent Mr. Adams from trying to stop it. Mr. Adams, a Democrat who is friendly with real estate developers, had concerns about the bill, which is set to take effect in June.