New York Tenant Screening Laws in 2019

NY Tenant Screening Laws

If you do operate in New York – as of June 14, 2019 a new bill – Statewide Housing Security and Tenant Protection Act of 2019 (the Act) – prohibits how much landlords, lessors, sub-lessors and real estate agents can charge for rental application fees and background checks. The new legislation is extensive in terms of its effects so we recommend that you consult with your attorney to determine whether the provisions of the Act apply to your operations and, if so, what changes you should make to your current policies and practices.

What does this act state in regards to rental applications & tenant screening more specifically eviction reports?

  1. Except in instances where statutes or regulations provide for a payment, fee or charge, no landlord, lessor, sub-lessor or grantor may demand any payment, fee, or charge for the processing, review or acceptance of an application, or demand any other payment, fee or charge before or at the beginning of the tenancy, except background checks and credit checks as provided by paragraph (b) of this subdivision, provided that this subdivision shall not apply to entrance fees charged by continuing care retirement communities licensed pursuant to article forty-six or forty-six-A of the public health law, assisted living providers licensed pursuant to article forty-six-B of the public health law, adult care facilities licensed pursuant to article seven of the social services law, senior residential communities that have submitted an offering plan to the attorney general, or not-for-profit independent 14 retirement communities that offer personal emergency response, house- 15 keeping, transportation and meals to their residents.
  2. A landlord, lessor, sub-lessor or grantor may charge a fee or fees to reimburse costs associated with conducting a background check and credit check, provided the cumulative fee or fees for such checks is no more than the actual cost of the background check and credit check or 20 twenty dollars, whichever is less, and the landlord, lessor, sub-lessor or grantor shall waive the fee or fees if the potential tenant provides a copy of a background check or credit check conducted within the past 23 thirty days. The landlord, lessor, sub-lessor or grantor may not collect the fee or fees unless the landlord, lessor, sub-lessor or grantor provides the potential tenant with a copy of the background check or credit check and the receipt or invoice from the entity conducting the background check or credit check.

In regards to eviction reports and prior disputes with landlords:

    9 § 227-f. Denial on the basis of involvement in prior disputes prohibited. No landlord of a residential premises shall refuse to rent or offer a lease to a potential tenant on the basis that the potential tenant was involved in a past or pending landlord-tenant action or summary proceeding under article seven of the real property actions and proceedings law. There shall be a rebuttable presumption that a person is in violation of this section if it is established that the person requested information from a tenant screening bureau relating to a potential tenant or otherwise inspected court records relating to a potential tenant and the person subsequently refuses to rent or offer a 19 lease to the potential tenant.

Source: https://legislation.nysenate.gov/pdf/bills/2019/S6458

I am a licensed real estate agent in New York, can I charge an application or more than $20 for a background check and run eviction searches on behalf of a landlord I represent?

Shortly after the law was passed there was much debate about whether a real estate agent or an agent of the landlord is exempt from this rule. On September 14, 2019 the Department of State Division of Licensing (DOS) released the following statement:

The $20.00 limitation applies to licensed real estate brokers and salespeople acting as an agent of the “landlord, lessor, sub-lessor or grantor”.

A licensed agent that collects a fee greater than $20.00 or fails to advise the landlord that such fees are prohibited may be subject to discipline by the Department pursuant to Section 441-c of the New York Real Property Law. Additionally, if a prohibited fee is collected and the property is subject to rent regulation, the tenant may also seek appropriate relief through HCR. The rule does not apply to licensed agents when the agent has been formally engaged to represent the interests of the prospective tenant.

Further they also released the following comment regarding eviction reports run by a real estate professional:

This restriction applies to licensed real estate brokers and salespeople acting as an agent of the “landlord”.

Source: https://www.dos.ny.gov/licensing/pdfs/DOS-Guidance-Tenant-Protection-Act-9.13.19.pdf 

The short answer to this is NO, the agent can’t charge more than $20 if the agent is representing the landlord and YES, the agent can charge more than $20 if the agent is representing the tenant. Agents that are dual agents should tread carefully.

Note this post is for informational purposes only and is not intended for legal advice. No representations are made by Atomic Innovation LLC also known as PreApprovedRenter.com or their affiliates. If you are seeking legal advice please consult an attorney.