Commission Rebates Are Legal in New York

Is The Real Estate Broker Commission Rebate Legal in New York?

Dan’s first blog post was on the topic of whether  broker commission rebates are legal in New York. 5+ years later, I thought it would be good to remind you the answer to the question are real estate rebates legal?

The answer is, in New York, the real estate broker rebate is most definitely legal.

Section 442 of New York’s Real Property Law was amended to carve out rebates from the provision which otherwise prohibits splitting commissions with an unlicensed broker. This amendment codified what was already deemed a legal practice by the Department of State and the Attorney General’s office. Both had previously issued opinions, letters and/or decisions agreeing that a licensed broker could offer rebates to their clients as an incentive for using its services. The operative section reads as follows:

“Except when permitted pursuant to the foregoing provisions of this Section, no real estate broker shall pay or agree to pay any part of a fee, commission or other compensation received by the broker, or due, or to become due to the broker to any person, firm or corporation who or which is or is to be a party to the transaction in which such fee, commission or other compensation shall be or become due to the broker; provided, however, that nothing in this section shall prohibit a real estate broker from offering any part of a fee, commission, or other compensation received by the broker to the seller, buyer, landlord or tenant who is buying, selling, exchanging, leasing, renting or negotiating a loan upon any real estate including the resale of a condominium or cooperative apartment.  Such fee, commission or other compensation must not be made to the seller, buyer, landlord or tenant for performing any activity requiring a license under this Article.”

Not only are real estate rebates legal, but, in 2015, the Attorney General encouraged it in a press release:  A.G. Schneiderman Urges Brokers and Home Buyers in New York to Take Advantage of Law Allowing Lower Commissions

Digs Realty began offering rebates to its buyer clients (and discounts to its seller clients) in 2014. Originally, our goal was to help our friends make home ownership more affordable. Quickly, our goal grew to help make home ownership more affordable for everyone looking to buy a home in New York City. Most recently, we expanded into Westchester, to save money for even more New Yorkers.

As of today (December 17, 2019), we are proud to have given almost $4MM in rebates and discounts to our buyer and seller clients. We know we are making a difference in many people’s lives. We are excited to continue on this journey and look forward to giving another $4MM in rebates and discounts in the coming years.

Please reach out if you are interested in learning more about our broker commission rebates in NYC.

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