A New York court has ruled in favor of a tenant seeking the return of a $500 holding fee that was charged by a landlord. This decision is significant as it reinforces tenant protections under the state's housing laws. The ruling impacts landlords and tenants alike, clarifying what fees can be legally charged during the rental application process.
The case, Fitzgerald v. New Horseheads Associates, LLC, was decided on June 18, 2026, in the Justice Court of the Village of Horseheads, Chemung County. The court, presided over by Judge David M. Brockway, addressed the legality of a holding fee charged by New Horseheads Associates, LLC (NHA) to Mark E. Fitzgerald, the plaintiff. Fitzgerald argued that the fee violated New York's Real Property Law, specifically Section 238-a, which limits the fees landlords can charge to prospective tenants.
Background
Mark E. Fitzgerald applied for a residential apartment unit owned by New Horseheads Associates on March 12, 2026. As part of the application process, he paid a $500 holding fee, which was intended to reserve the apartment until the application was processed. The application agreement stated that if the application was denied, the holding fee would be refunded. However, if the application was approved and the tenant canceled, the fee would be retained as liquidated damages.
After touring the apartment, Fitzgerald declined to proceed with the application due to concerns about the unit's condition and unexpected fees. He requested the return of his holding fee, but NHA refused, citing the liquidated damages clause in the agreement. Fitzgerald then filed a claim in small claims court, arguing that the holding fee was illegal under Section 238-a of the Real Property Law.
The Ruling
The court ruled in favor of Fitzgerald, stating that the holding fee violated the provisions of Section 238-a. Judge Brockway emphasized that the language of the statute is clear and unambiguous, stating, "the language of §238-a is plain and unambiguous; one thus does not need to look beyond it as to what might have been its legislative history or intent."
In his opinion, Judge Brockway noted that the statute prohibits landlords from demanding any fees for processing applications, except for background and credit checks. He concluded that the holding fee was an impermissible charge and that the forfeiture of the fee as liquidated damages was also forbidden. The court ordered NHA to return the $500 holding fee to Fitzgerald, along with a $10 filing fee, totaling $510.
Impact
This ruling reinforces tenant protections in New York, clarifying that landlords cannot impose additional fees beyond those explicitly allowed under the law. It serves as a reminder to landlords about the limitations on fees they can charge during the rental application process. The decision may influence other similar cases and encourage tenants to assert their rights regarding unlawful fees.
The ruling also highlights the importance of the Housing Stability and Tenant Protection Act of 2019, which aimed to improve tenant protections in New York. By affirming the limitations on fees, the court supports the legislative intent to reduce barriers for tenants seeking housing.
What's Next
Details were not available in the court filing regarding whether NHA plans to appeal the decision. However, this ruling may set a precedent for future cases involving similar disputes over landlord fees.