The New York State Department of State (the “DOS”) has just issued a Guidance for Real Estate Professionals in connection with the Housing Security and Tenant Protection Act of 2019 (the “Act”), that addresses, among other topics, the $20 limit on application fees.
 
Under the Act, a “landlord, lessor, sub-lessor or grantor” is now prohibited from collecting an application fee greater than $20.00 (see NY Real Property Law § 238-a(1)(b)). Further, “if the potential tenant provides a copy of a background check or credit check conducted within the past thirty days, ” the fee must be waived (see NY Real Property Law § 238-a(1)(b)).
 
Since Co-ops have a landlord-tenant relationship (unlike condominiums), Co-ops fell under the purview of the Act and were subject to this $20 cap.
 
The new guidance issued by the DOS decrees that the $20 cap does not apply under the following circumstances:
 
•           When a property is being sold including within a Co-op or Condo; and
•           Application fees imposed by Co-op/Condo boards (i.e., fees charged by persons other than the unit owner).
 
Please note that the Act was not officially amended. It is currently unknown whether a judge will look to the Act or the DOS Guidance Memo as the authority on the matter. Time will tell.