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Is "key money" legal in New York?

Renters in New York are often required to pay certain fees to secure housing. However, some of these fees might skirt the legality of what landlords can ask of tenants. The New York City Rent Guidelines Board (RGB) reminds renters that they have legal protections on a wide range of issues.

The RGB's advice is to "Be Careful about the Fees You Pay." Generally, the fees you may be asked to pay are legal, however, there are some common ways that certain individuals might attempt to take advantage of overzealous or desperate renters.

  • Brokers' fees: Often real estate brokers will charge a fee for finding you an apartment. There are no regulations surrounding the amount of the fee. However, the real estate broker cannot actually collect the fee unless he or she offers a lease on an apartment.
  • Referral service fees: Much like a real estate broker, these services will work to find an apartment that meets your established parameters. Again, much like brokers, these services cannot collect the full fees unless they actually find you an apartment.
  • Application fees: The property owner or managing agent can charge an application fee that is often used to cover the costs associated with reference checks and checking your credit rating. These fees, however, must bear a reasonable relationship to the cost of these activities. Being asked to pay an application fee of $1000 or more might more be considered "key money."
  • Key money: If the property owner or managing agent attempts to charge a fee over and above normal costs, this is considered key money. Demanding key money on residential property is illegal. Unfortunately, these demands are verbal and it might be challenging to get the Attorney General's Office involved - unless you have corroborating witnesses or other evidence.

If you have a legal dispute with your landlord or you have questions regarding the legality of your landlord's actions, it is wise to consult with a skilled attorney to have the matter resolved efficiently.

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