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Posted: September 29, 2015

Service That Identified Rent Overcharges Not Providing Real Estate Brokerage Services

On September 29, 2015, the First Department issued a decision in Commercial Tenant Services, Inc. v. Northern Leasing Systems, Inc., 2015 NY Slip Op. 06984, holding that a contract relating to “negotiating escalation adjustments or settling disagreements with a landlord about overcharges” was not void for “violat[ing] Real Property Law §§ 440(1) and 440-a,” explaining:

[A]rticle 12-A of the Real Property Law, which includes sections 440 and 440-a, should be strictly construed. Strictly construing section 440(1), we find that offering or attempting to negotiate a rental of an estate or interest in real estate does not include negotiating escalation adjustments or settling disagreements with a landlord about overcharges. Plaintiff’s services, which primarily consisted of finding overcharges, fall outside the scope of real estate brokerage services.

(Internal quotations and citations omitted).

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