Is Illegal Subletting Putting Your Property At Risk?

The last few years have seen explosive growth in illegal subletting, with the main driver being the increasingly mainstream adoption of short term rental sites like airbnb.com. Airbnb and its ilk, while disrupting the entire hotel industry, are also impacting hosts (people that rent or sublet their home through the rental sites), their guests, other tenants in the building, property managers, and, in some cases, even entire cities – cities where housing crises are made more acute with housing stock taken off the market and converted into unregulated hotels.

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Ignorance doesn't equal bliss

Ignorance May Be Bliss But It Is No Defense To Transient Occupancy Fines

The proliferation of tenants’ use of apartments as transient accommodations has not gone unnoticed by New York City’s Department of Buildings (“DOB”). The DOB has been issuing violations to the property owners of buildings where such practice is detected. The violations for transient occupancy are steep, running as much as $1,000 per day! Worse yet, the Environmental Control Board (“ECB”) has been sustaining such violations even where the building owner had no knowledge of such use.

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Short Term Rental Of Rent Stabilized Apartment On Airbnb Held To Be An Incurable Ground For Eviction

On February 17, 2015, the New York City Housing Court (Hon. Jack Stoller J. H.C.), after trial, held that a rent stabilized tenant’s nightly renting of his apartment to various third parties via Airbnb constituted illegal profiteering and awarded landlord a final judgment of possession and warrant of eviction. Notably, the Court held that tenant’s infraction by engaging in short term rental was incurable and thus landlord was not required to first serve tenant with a notice to cure before commencing the eviction proceeding.

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Transient Occupancy From A Co-op / Condo Perspective

The increasing use of apartments for transient “Airbnb”-type occupancy discussed elsewhere in this newsletter has spread to co- ops and condominiums as well. However, because of their unique ownership and operational features, co-ops and condos — and their residents (who each paid significant sums for the privilege of owning their residence, and never expected to run into transiently new faces in the corridors and elevators on a revolving door basis) —are impacted differently. While at least one case, which is referenced in other articles in this newsletter, has resulted in the eviction of a rent-regulated tenant based on illegal profiteering, that basis would likely not exist in a co-op or condo setting. Consequently, co-op and condo Boards and managing agents need to approach transient occupancy differently than do rental building owners.

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