Short-Term Airbnb Rentals are Not Only Illegal but Now More Costly
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Short-Term (Airbnb) Rentals Are Not Only Illegal But Also Now More Costly

7/5/2017 |  By: Michelle P. Quinn, Esq. | GDB 2017 Summer Newsletter

New York is the first state in the nation to ban advertising illegal apartment rentals online. Not only is renting an apartment for a few days illegal, but advertising this type of short-term rental can now result in a significant fine. 

To show that it means business, New York City began enforcing the new law in February 2017, issuing violations to hosts of illegal short-term rental apartments, whether they be tenants of a rent-regulated apartment or a multi-million dollar condominium.

In October 2016, Governor Cuomo signed the new law that prohibits advertising a short-term rental (for fewer than 30 days) of apartments in permanent residency buildings, known as “Class A” multiple dwelling buildings. While it has been illegal in New York since 2010 to rent out most apartments for fewer than 30 days if the owner or tenant is not living in the unit, the new provision makes it illegal even to advertise such rentals, thereby directly impacting the proliferation of New York City rentals on such online home-sharing platforms such as AirBnb, VRBO and HomeAway.

Now, under Section 121 of the New York Multiple Dwelling Law of the State of New York, the owner or tenant can be fined up to $1,000 for the first violation, $5,000 for the second violation, and $7,500 for the third and each subsequent violation. The law defines “advertise” broadly to mean any form of communication for marketing that is used to encourage, persuade or manipulate viewers, readers or listeners into contracting for goods and/or services. 

Short-term rentals have experienced explosive growth in New York since 2010. Particularly in the wake of Hurricane Sandy in 2012, short-term rentals became a valuable commodity for those displaced by significant damage to their homes. 

Pros and Cons Regarding Short-Term Rentals

Proponents of such rental arrangements argue that they support tourism and help residents defray high rents. Such arrangements, they maintain, offer both a cost savings to guests and a financial benefit to hosts trying to make ends meet in high-priced rentals. Proponents cite some studies that have shown that tourists who save on lodging tend to stay longer and spend more on local businesses.

Opponents of short-term rentals argue that short-term rentals pose safety concerns, for guests, hosts, and other residents, tenants and owners in permanent residency buildings. They point out that the 2010 prohibition against transient occupancy in permanent residency buildings was instituted to ensure that all buildings comply with fire, building, and other safety codes relative to their class. Safety codes for “Class B” multiple dwelling buildings, such as hotels and rooming houses which permit transient occupancy, are more stringent, to ensure that occupants are protected. Opponents contend that short-terms rentals drive up rent and deplete the already chronically tight housing market in New York. 

Landlords and cooperative and condominium boards in permanent residency buildings oppose short-term rentals to transients because, they argue, short-term rentals change the character of the building; allow strangers to appear at all hours of the day and night and have unfettered access to building amenities; cause excessive noise; increase wear and tear costs; strain elevator usage; increase liability; and engender fear among long-term tenants who do not know the transients coming into the building. They suggest that permitting short-term rentals has a negative effect on the value and marketability of units for sale, by discouraging potential purchasers who are seeking a safe and stable living environment. 

Steps that Property Owners Can Take to Eliminate Short-Term Rentals 

Short-term rentals are not only illegal but are also almost always a violation of a tenant’s lease.  Landlords should not be reluctant to end long-term or regulated tenants who repeatedly participate in short-term rental arrangements in violation of their leases.  The courts have generally upheld efforts to evict tenants for such violations, as demonstrated in a New York appellate court decision in May this year, Goldstein v. Lipetz, in which the court upheld an eviction of a rent-stabilized tenant of 40 years in a private cooperative as a consequence of her recurrent subletting of her apartment for a profit.  

Landlords who want to decrease or eliminate short term rentals can take a number of steps, such as: 
  • establish heightened monitoring and enforcement practices, including revising house rules to discourage short-term rentals, which should be carefully drafted to ensure compliance
  • send reminder letters to all residents about the prohibition against short-term rentals
  • increase training and awareness of staff
  • use sign-in logs for all visitors
  • use cameras in common areas
  • and use a monitoring service (such as Sublet Spy or Sublet Alert)
Once sufficient evidence of a violation is collected, a landlord can pursue its legal remedies more efficiently and effectively.