NY Will Prohibit “Unfair” Real Estate Service Agreements

The State of New York enacted (in late 2025), and subsequently amended (in February 2026), a law prohibiting as “unfair” real estate service agreements that are not to be performed within two years, if they have certain features.

“Real estate service agreements” refer to written agreements to provide services in connection with the maintenance, purchase, or sale of residential property.  They are deemed “unfair” under the NY law if they are not to be performed within two years of entering into them and have one or more of the following features:

• Runs with the land or binds future owners of the property;
• Allows for assignment of the right to provide services without notice to and consent from the property owner;
• Creates a lien, encumbrance, or other security interest in the property (other than a properly-issued mechanic’s lien); or
• Is a real estate listing agreement.

However, the law creates an exemption from this definition for: home warranties; insurance contracts; options or rights of refusal to purchase the property; declarations to create or amend common interest communities; maintenance or repair agreements with homeowners’ associations; mortgage loans; security agreements under the Uniform Commercial Code related to the sale or rental of personal property or fixtures; contracts with utilities; and (now, under the amended law) agreements which are mandated by a governmental entity or to which a governmental entity is a party.

Prohibited agreements under the new law are unenforceable, may not be recorded, and are not deemed to provide actual or constructive notice against an otherwise bona fide purchaser or creditor.  Offering such agreements is a violation of the New York state law which prohibits unfair, deceptive, or abusive acts or practices.

The law, as amended, takes effect on March 12, 2026.