The Department of State set the new policy in a guidance memo Feb. 4, intended to clarify the rent reform laws passed in June. The regulators declared that landlords must pay the fees charged by brokers they hire to lease an apartment, breaking with the long-held practice of landlords passing those fees to tenants.

REBNY and the state Association of Realtors will argue in the lawsuit that the state overstepped its authority with the decision and dealt an "immediate and devastating" blow to the city's 25,000 real estate brokers.

Joining REBNY and the state realtor group in the lawsuit is a long list of apartment brokerages: Bohemia Realty Group; Bond New York; The Corcoran Group; Douglas Elliman; Halstead; Brown Harris Stevens; Sotheby's; R New York; Kian Realty; Regina Wierbowski Real Estate; Level Group and City Connections Realty.

The groups say that broker fees were never mentioned in the Statewide Housing Security and Tenant Protection Act of 2019, the June rent reform law that the Department of State guidance is meant to address.

"Instead, it is clear that here, the DOS usurped the role of the Legislature and that its actions constitute an illegal exercise of legislative power," the lawsuit argues.

The legal challenge names the Department of State and New York Secretary of State Rossana Rosado. A request for comment from the department was not immediately returned.

The case, which is overseen by state Supreme Court Justice Michael Mackey, will return to court March 13.