Ask an Expert: Paying a broker fee to a building manager?

If your manager isn't licensed in any way, it's illegal for him to attempt to collect a fee.
If your manager isn’t licensed in any way, it’s illegal for him to attempt to collect a fee. Photo Credit: Getty / Mario Tama

We saw a sign outside a brownstone for the basement apartment for rent (there was no mention anywhere of a broker’s fee). We called the number, and the property manager showed us the apartment about two hours later. We liked the apartment and signed the forms right then and there, at which point he told us we owed him a 15% broker’s fee. Since he didn’t mention the fee up front, and did only a few minutes of work for us, is he really entitled to a 15% fee, or can we fight this?

While the sign you saw didn’t need to explicitly mention the broker’s fee, you’re right to be suspicious of how your property manager is behaving, say our experts. “It definitely sounds sketchy and illegal the way this guy handled it,” says D. Baum & Co broker Gus Waite.

It’s not uncommon for property managers to be licensed as real estate salespeople, as we’ve written previously, but if your manager isn’t licensed in any way, it’s illegal for him to attempt to collect a fee. And even if he does have a license, state law requires that he should have had you sign a NYS Agency Disclosure form at the beginning of the transaction to clarify who he worked for, and the nature of the broker fee. (You can see an example of the form here.) “When you walked in, the person you spoke with should have said ‘Before we go any further, I want to explain the nature of our relationship. My name is Joe, I work for ABC Realty, if you choose to rent here, there’s a fee, and this is who it’s paid to.'”

As for your recourse, “That gets a little hairy,” says Waite. You are indeed legally within your rights to report him to the Department of State for failing to appropriately disclose his position (and the fee) to you when you first saw the apartment. (You can find information about filing a complaint here, and the complaint form here.) And it’s possible that if you even mention this possibility, he’ll drop his demands for that fee.

“The question is,” says Waite, “is this the owner’s brother, and now he’s going to make your life miserable because you didn’t pay?” It may be worth pausing to consider what’s more important –hanging on to that 15% fee, or settling into your apartment in peace. “If this were my cousin, I might just say suck it up and pay, lesson learned.”

Virginia K. Smith is the senior editor at BrickUnderground.com, the online survival guide to finding a NYC apartment and living happily ever after. To see more expert answers or to ask a real estate question, click here.