New Ordinance In Newark To Protect Tenants From Broker Fees

With living costs continuing to rise during what has been dubbed the affordability crisis, Newark residents looking to rent a home can expect to find some relief. Recently, the Municipal Council approved Mayor Ras Baraka’s proposed ordinance to prevent owners and their agents from charging tenants brokers fees.

The newly approved ordinance is a part of the Mayor’s “Keeping Newark Affordable” legislation. It is also a companion to another legislation currently under discussion before the NJ State Legislature, which reflects ongoing State concerns over the impact these charges have on people seeking to rent a home. 

In a release from the City of Newark, Mayor Baraka was quoted saying the following: “When people rent an apartment in Newark, they too often must pay a large brokers fee or commission in addition to the security deposit of one or two months’ rent and the high expense of moving.” 

“This widespread practice adds to the major expense and stress of finding a new place to live and takes advantage of the desperate need to find an affordable apartment during a severe housing shortage. Our new ordinance lifts an unfair and unjust burden on tenants, and puts it where it belongs, on the backs of landlords, owners, developers and their agents.”  

Mayor Baraka’s new ordinance states that a landlord cannot recover a broker’s fee from a tenant in another form. Landlords also can’t raise the rent or add fees to pass that cost along or ask a tenant for reimbursement. The brokers themselves, however, can still be hired and expect payment from the appropriate party. 

What Tenants and Landlords Need to Know

Brokerage firms connect the buyer to the seller, and, in this case, tenants to landlords. Some local laws, like New York City’s FARE Act, states that those hiring the broker are responsible for paying the fee. Therefore, landlords must pay their own listing or brokerage fees rather than requiring tenants to pay them. 

The new ordinance for Newark states that tenant fees must be listed and advertised in a clear manner to ensure this transparency. Landlords and agents must also provide tenants with an itemized written disclosure detailing all fees the tenant is required to pay, as well as the penalties the landlord may incur should they violate the ordinance. Violations carry a fine of up to $1,250 and each improper fee charged to a tenant counts as a separate violation. 

The new initiative also makes it illegal to require or condition the leasing of a residential property on a tenant’s engagement with a brokerage firm or agent. Landlords must sign a statement affirming that tenants will not be required to pay any brokerage fees. 

The ordinance is enforced by the Division of Rent Control within the Department of Economic and Housing Development and the Newark Department of Public Safety. 

The ordinance takes effect 20 days after passage and aims to increase transparency around rental brokerage fees while establishing clearer protections and responsibilities for Newark tenants, landlords, and brokers. For more information, visit the City of Newark’s official announcement.