Misuse Of Apartments For Transient Rentals Poses Challenges For Landlords And Boards
Airbnb is to the local rental housing industry what Uber is to the taxi industry – a technological innovation that has taken the City by storm. One main difference, however, is that the New York State Attorney General has reported (http://www.ag.ny.gov/pdfs/Airbnb%20report.pdf) that nearly three-quarters of all private short-term rentals on Airbnb appear to violate New York State and local laws. In particular, given the large number of Airbnb listings in New York City, unlawful Airbnb rentals may be occurring in your multi-family building.
Airbnb subscribers who lease their apartments are not merely overlooking some arcane, outdated regulation. Rather, private short-term rentals on Airbnb can trigger issues under the basic statutes and regulations governing rental housing in New York, including the New York State Multiple Dwelling Law (“MDL”), the New York State Rent Stabilization Law, the New York City Rent and Rehabilitation Law (Rent Control Law), the regulations implementing the rent laws, the New York City Housing Maintenance Code, and the New York City Building Code.
Private short-term rentals occurring in a Class A multiple dwelling also run afoul of the building’s certificate of occupancy. In addition, depending on the type of building and apartment at issue, private short-term rentals may violate by-laws, proprietary leases, lease provisions governing use and subleasing of the premises, and the like. As a result, legal proceedings against Airbnb subscribers leasing their apartments can originate from a variety of sources. These may include a landlord, board of directors, or board of managers seeking to evict the offending renter, and also the City’s Department of Building’s (DOB) Administrative Enforcement Unit, which has successfully imposed monetary penalties against Airbnb law violators.
Concerns associated with unauthorized short-term rentals may include increased wear-and-tear on the building’s common space and the possibility of property damage, insurance issues, and breach of rent regulation laws, whose purpose is to ensure the availability of rental housing to be used as the occupants’ primary residence. Another significant concern can be the safety of a building’s other residents, who now find themselves sharing their building with strangers who have not been adequately vetted.
In July 2010, the New York State Legislature amended the MDL in response to the perceived danger posed to the occupants of short-term rental buildings by widespread non-compliance with fire and safety codes for transient use. The Legislature was also concerned that such rentals unfairly competed with legitimate hotels that had made substantial investments to comply with the law. The 2010 amendment clarified the definition of occupancy of a multiple dwelling for “permanent residence purposes.” The MDL explicitly bars the rental of any unit in Class A multiple dwellings for a period less than 30 days. Thus, in cases where temporary-housing website subscribers were caught renting out their entire apartments for periods of less than thirty days, the courts readily found that the subscribers were violating the law. One such case is Board of Managers v. Grishanova, 2013 N.Y. Misc. LEXIS 6242, 2013 N.Y. Slip Op. 33650(U) (Sup. Ct. N.Y. Co. 2013), aff’d, 117 A.D.3d 442, 985 N.Y.S.2d 72 (1st Dep’t 2014).
An exception to this prohibition permits “occupancy of [a] dwelling unit for fewer than thirty consecutive days by other natural persons living within the household of the permanent occupant such as house guests or lawful boarders, roomers or lodgers.” (MDL § 4(8)(a)(1)(A)). Additionally, in defining the term “family,” MDL § 4(5) states that a “‘boarder,’ ‘roomer’ or ‘lodger’ residing with a family shall mean a person living within the household who pays a consideration for such residence and does not occupy such space within the household as an incident of employment therein.” Several Airbnb listing subscribers have successfully relied on these provisions in proceedings before the DOB and the New York City Environmental Control Board (ECB), the administrative body to which DOB violation decisions are appealed.
As a practical matter, the City does not have enough resources to investigate and prosecute everyone who leases out his or her apartment in violation of the MDL. Typically, the City will pursue cases only against persons who grossly abuse the law with a lengthy series of rentals. Thus, the role of enforcing restrictions against transient rentals will generally fall to the building’s landlord or board. Separate from the question of whether a transient rental violates the MDL, it may violate the provisions of a rental tenant’s lease or a cooperative tenant-shareholder’s proprietary lease, prohibiting or restricting short-term subletting. Where it does, the landlord or board may seek appropriate remedies against the offender, including injunctive relief or lease termination.
In addition, rent-regulated tenants risk losing their apartments if they seek to profit from short-term rentals of any portion of their units. For example, in Bpark v. Durena, Index No. 100145/2014, NYLJ 1202725492875 (Civ. Ct. Kings Co. Apr. 1, 2015), the court awarded the landlord a final judgment of possession against a rent-stabilized tenant who regularly rented to others through Airbnb. The court reasoned that “[s]uch brazen and commercial exploitation of a rent-stabilized apartment significantly undermines the purpose and integrity of the Rent Stabilization Law and Code and is therefore incurable.”
In Brookford v. Penraat, 47 Misc. 3d 723, 8 N.Y.S.2d 859 (Sup. Ct. NY Co. 2014), the court granted the landlord’s motion for a preliminary injunction enjoining the tenant from advertising and renting the apartment unlawfully. The tenant had been receiving Senior Citizen Rent Increase Exemption (SCRIE) benefits, reserved for senior citizens with an annual income of less than $50,000 per year. At the same time, the tenant rented out three of the four bedrooms of her Central Park West rent-controlled duplex, on a “continuous basis to tourists and other transient visitors,” some 135 times in an 18-month period. The court determined that this constituted “an incurable violation of the Rent Control Law,” because the tenant “‘willfully violated’ a substantial obligation of the tenancy and inflicted serious and substantial injury upon the owner within a three month period immediately prior to the commencement of the proceeding.”
Landlords or board members concerned about short-term rentals in the buildings, or seeking to maximize their ability to prohibit or restrict such rentals, should consult with their legal counsel.