Guidance Issued Regarding the $20 Cap on Application Fees

Written By: Scott M. Smiler


The New York State Department of State (the “DOS”) has just issued a Guidance for Real Estate Professionals in connection with the Housing Security and Tenant Protection Act of 2019 (the “Act”), that addresses, among other topics, the $20 limit on application fees.
Under the Act, a “landlord, lessor, sub-lessor or grantor” is now prohibited from collecting an application fee greater than $20.00 (see NY Real Property Law § 238-a(1)(b)). Further, “if the potential tenant provides a copy of a background check or credit check conducted within the past thirty days, ” the fee must be waived (see NY Real Property Law § 238-a(1)(b)).
Since Co-ops have a landlord-tenant relationship (unlike condominiums), Co-ops fell under the purview of the Act and were subject to this $20 cap.
The new guidance issued by the DOS decrees that the $20 cap does not apply under the following circumstances:
•           When a property is being sold including within a Co-op or Condo; and
•           Application fees imposed by Co-op/Condo boards (i.e., fees charged by persons other than the unit owner).
Please note that the Act was not officially amended. It is currently unknown whether a judge will look to the Act or the DOS Guidance Memo as the authority on the matter. Time will tell.

about the authors

Scott M. Smiler


For the past two decades, Scott's practice has focused primarily on transactional real estate matters — Cooperative and Condominium Board Representation; Buying and Selling of Properties; Commercial Leasing and Neighbor Access Agreements.

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