Rentals in New York>Question Details

Richard, Renter in New York, NY

Is it legal to pay 50% of the broker's fee to the actual broker and 50% to the individual of the rental property management company?

Asked by Richard, New York, NY Thu Feb 13, 2014

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Brokers are not allowed to give kickbacks, it is illegal. Owners and property managers should not and are not allowed to receive a brokers fee (other than administrative fees, such as credit reports and so on). They have a vested interest making it a conflict of interest. Lets put it this way.... "I wont accept your application on the apartment if you don't pay me a brokers fee"
It's sad that in NYC, so many brokers are subjugated to this unethical behavior on behalf of property owners and managers.
0 votes Thank Flag Link Fri Feb 14, 2014
We would differ with our colleagues answers below. Our question back to you is what does the Agency Disclosure Form that the selling agent gave you actually say? Did you get a disclosure form as the NY Department of State requires the agent to have given you one to sign thus you should have been aware of who was representing each party. The Kaplove Morgan Team operates in complete transparency on every transaction. All of these Management companies on not co-brokers and should not be sharing in the commission. Please feel free to contact us with any questions you may have going forward.

Best regards,
The Kaplove Morgan Team
Halstead Property, LLC
499 Park Avenue
New York, NY 10022
Jim Kaplove 646,241,7380
Jessica Eve Morgan 646.660.4257
0 votes Thank Flag Link Thu Feb 13, 2014
Property management companies in NY may often require rental commissions. You might ask if they have a real estate license, although I'm not sure that will do any good.

If they are an employee of the company, they are salaried and should not be asking for rental commission.
0 votes Thank Flag Link Thu Feb 13, 2014
You can pay the rental property management company, not the "individual" directly, if that's what the question is about.
0 votes Thank Flag Link Thu Feb 13, 2014
Many thanks! So here is the issue.. In renting an apartment in a pre-war. I was told by the broker that he had an 'exclusive' arrangement. When trying to negotiate the fee below 15%, he said it was not possible as 50% of the brokerage fee would be paid to the property management company. In principle, I question the ethics of this... as I'm paying brokerage to the very party that is effectively assuming the position of the landlord (rent negotiation, maintenance, etc). I can't help but feel the broker was paying the property management a kick back for his 'exclusive' arrangement. Anyway, when paying the brokerage fee, the broker did not pay the property management company his share of my brokerage, rather I was asked to make a check to Mr X (yet the property management company name is "Mr X Property Management). Mr. X has a brokers license. Even though the guy runs the company and has a license, I can't help but feel that they dishonestly had me pay a gift! Is this legal?
Flag Thu Feb 13, 2014
yes, it is.

They probably split the fee.
0 votes Thank Flag Link Thu Feb 13, 2014
Sounds like a co-broke situation which is legal.

0 votes Thank Flag Link Thu Feb 13, 2014
Hi Richard,

You may be dealing with a co-broke situation, where you were working with a tenant's agent and the property manager is also the landlord's agent. If this is the case, the fee is actually split 50-50 between the 2 brokers.

Hope this helps.

Karen Cheung
0 votes Thank Flag Link Thu Feb 13, 2014
In NY, only Licensed Real Estate Salesperson /Broker can show, rent and sell real estate. And, commission must be paid to the Principal Broker or Company the "individual" is associated with. However, there is no restriction on "gift" as long as it is not a compensation for services rendered.
0 votes Thank Flag Link Thu Feb 13, 2014
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