New York City has always operated differently in the real estate world than almost anywhere else. Long after the rest of us began to publish lists of every property on the market, they held on to the old system of each broker representing only his or her own listings. When we started putting our Multiple Listing Service online, they kept to the scattered knowledge of listings that they'd always had.
Last week, a ruling came down from the New York State licensing agency, saying that renters no longer had to pay a broker's fee when renting an apartment, unless they represented a renter. Issued as a "legal guidance", it changes the current practice, where brokers control access to most listings, and charge the renter up to 15% of the yearly rent, at the time that the lease is signed. Brokers and real estate associations are fighting the ruling, although it isn't clear what will happen to any challenges. Going forward, real estate brokers must either get paid by the landlords, or must have a representation agreement with the tenants.
Essentially, that's what happens in Connecticut. We are required by law to offer representation to buyers and tenants, and they must sign an agreement for that to be in effect. Landlords and owners most often do pay us, but we have a fiduciary relationship with buyers and tenants whom we represent. We need another set of signatures in order to represent both the seller/landlord and the buyer/tenant, and that creates what is called dual agency. Our duties are not related to how the commission gets paid; it's about what gets signed.
It's interesting that NYC is so late to the party, because the rights of tenants and buyers have been at the forefront of change around the country for a long time. Because we have so many people coming to Connecticut from NYC, it often comes as a surprise to learn about our laws and requirements. Now that they are going to have the same types of agreements, signing for representation may come to seem more routine.
