Massachusetts' new broker fee law, explained
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Massachusetts' new law eliminates renter-paid broker fees except when the tenant specifically hires a broker.
Why it matters: Renting in a high-cost city is hard enough without tacking another month's worth of rent to pay a broker they didn't contract before starting the apartment hunt.
Between the lines: The new law clarifies existing statute, which forbids landlords from charging broker or application fees, to ensure landlords don't pass on the cost of a broker to the renter.
- Proponents say this should prevent tenants from being on the hook for a broker hired by a landlord to list and show a rental unit, along with paying first month's rent, last month's rent and a security deposit.
What they're saying: "If the landlord hires the broker, the landlord should pay the fee," Todd Kaplan, senior attorney at Greater Boston Legal Services, said in a statement after Gov. Maura Healey signed the law.
Yes, but: That doesn't stop landlords from raising the rent to offset the cost of paying the broker they hired.
The other side: Massachusetts doesn't have a broker fee problem as much as an enforcement problem, says Doug Quattrochi, executive director of the trade association MassLandlords.
- For all the landlords who contract brokers and pay the fee upfront or don't use them, there are many others who flout the rules — and who may just raise the rent to cover the cost.
- Some landlords, including those who have taken the association's crash course, have learned how to screen prospective tenants themselves if they can't afford or don't want to work with a broker.
Greg Vasil, CEO of the Greater Boston Real Estate Board, said the group hopes these changes will bring " much-needed relief" for renters, but that state and real estate leaders should work together to understand their impact.
- "Brokers possess a deep knowledge of the markets and communities they serve, and whether it is the renter or property owner who hires them, they will continue to receive the compensation they deserve."
What's next: The new statute takes effect Aug. 1, before the rush of Sept. 1 move-ins ahead of the universities' academic year.
- But many residents moving Sept. 1, whether in college or the workforce, likely re-signed their leases months ago.