Despite new law, renters say some landlords still try to foist broker fees on them

The Massachusetts attorney general's office has received more than a dozen complaints accusing landlords and real estate agents of breaking the state's new rules on broker's fees.

The law, which took effect last August, says the fee must be paid by the person who hires the broker — and in most cases, that is the landlord. But complaints filed by people seeking apartments say some brokers told them they'd have to pay the fee, simply because they inquired about an online listing. And some people were told if they refused to pay the broker's fee, the landlord would raise the rent to cover it.

In one case, a prospective tenant reported that after finding a listing on the online real estate marketplace Zillow, they were told they'd have to pay half the broker’s fee, or the landlord would increase the rent by $100 per month. That's according to records reviewed by WBUR from the attorney general's office.

“I did not hire this broker, they listed this apartment, so I shouldn't be responsible, the landlord should,” the prospective tenant said in a complaint about a listing by CWS Realty of Newton. The tenant, whose name is redacted in the statement, did not move forward with the apartment. The realty group declined to speak on the record.

In each of the complaints, landlords or brokers appear to be skirting the spirit of the law, which is aimed at requiring landlords to shoulder the cost of renting out their properties.

The law, signed by Gov. Maura Healey as part of the state budget, requires that broker's fees “be paid by the person who hired the broker or salesperson."

Prior to this measure being enacted, Boston was infamously one of the last major cities to allow the burden of broker fees to fall on renters, rather than landlords. Renters can still hire a broker to represent them and find them an apartment. In that case, the renter would agree to pay the broker’s fee.

And that caveat appears to be creating confusion — or a loophole that some in the real estate business appear to be exploiting.

Brokers claim in many instances they are not "explicitly hired” by a landlord in the form of an official, written contract. So, when brokers advertise a listing online, they argue they can charge a fee because they are looking to be “hired” by the prospective tenant.

But Todd Kaplan, a senior attorney at Greater Boston Legal Services, said that argument “completely misconstrues the law.”

Kaplan said this forced broker’s fee — typically equal to a month’s rent — is exactly the kind of practice the law was intended to prevent. He said any arrangement with a landlord to bring prospective tenants to a property functions as a contract, and it’s the landlord who must pay the fee.

“The landlord is giving the broker information, which is valuable to the broker, in exchange for the landlord agreeing to consider applications that that broker brings to them," Kaplan said. "That's the contract. That's the understanding.”

And it doesn't need to be formally in writing, he said.

In Kaplan’s view, any online listing posted by a real estate broker that requires the tenant to pay a broker fee is highly likely to be illegal.

The attorney general’s office echoed Kaplan’s interpretation, saying in a statement to WBUR, “The fact that no formal contract exists with a landlord is not enough for a broker to charge a fee to a tenant.”

A Zillow spokesperson called the broker fee law “an important step forward in reducing the large financial barrier for Massachusetts renters looking to move,” and added, “maintaining strong enforcement of the law is key.” The spokesperson said renters should contact the attorney general's office if they are improperly charged a broker's fee.

One person complained to the attorney general's office about Red Tree Real Estate of Brookline trying to charge a “commission” on a listing. The potential renter said they “at no point entered an agreement” with the broker to find an apartment for them, nor agreed in writing to pay a fee.

Adam Kotkin, co-owner of Red Tree Real Estate, said the property was part of an “open listing,” meaning the landlord or property manager sent out an available apartment to multiple brokers to advertise. Kotkin said with an open listing, there’s no exclusive agreement between Red Tree Real Estate and the landlord.

“We are not representing the landlord in any way other than to try and find a client,” Kotkin explained. “We don’t have an exclusive agreement signed with that owner.”

Kotkin said lawmakers “didn’t do a good job writing the law” and left brokers to navigate the changes without any guidance from the state. He said a simple fix would have been to require landlords to always pay the fee.

“In reality, the landlord should just be paying the fee,” Kotkin said. “It would solve everyone’s problem. It would take the fee  away from the tenant who we're trying to make housing more accessible to.”

A spokesperson for the governor said in a statement that the rules are clear about who is required to pay a broker’s fee and the “compliance with the law is mandatory.”

In another case of an “open listing” on Zillow, a prospective tenant accused a broker from Keller Williams Realty of Boston of seeking a fee.

“At that point in time it was an ‘open listing’ and I was advertising the apartment seeking to have a relationship with the prospective tenant as their rental agent,” said Renee Lombardi, the broker, in an interview.

Lombardi said in that instance, she wasn't able to lock down a tenant from the original online listing, so she convinced the landlord to officially list the apartment, to hire her exclusively and to pay her the fee.

She was surprised by Kaplan’s interpretation of the law and said she would talk to her office manager about it.

“If that is in fact the law then I will no longer be advertising Open Listings,” she added in an email.

The attorney general's office says anyone who's asked to pay a broker they didn't originally hire should file a complaint or call. Landlords could face fines for charging illegal fees, and brokers could lose their licenses.

“My office reviews every complaint we receive, and we are often able to reach a resolution for consumers through our free assistance services without having to bring formal enforcement action,” Attorney General Andrea Campbell said in a statement.