Tuesday, November 26, 2013

Hotel Occupancy Tax on Expedia, are brokers next to be taxed for their rentals?

Last week, the Court of Appeals, NY's highest court, ruled that "Local Law 43, a hotel room occupancy tax applicable to online travel companies", is constitutional.

At issue before the Court was the legality of the City's "authority to tax the fees they collect from their customers" in Expedia v. City of NY Dept. of Finance where this fee represents an amount, which is larger than the amount actually paid the hotel for the actual occupancy of the room.

So the question before the Court was whether the brokerage fee, on hotel occupancy, was taxable? 

This decision is most interesting to real estate professionals because they always wonder why there are rules for transient (short-term) rentals of housing. As they can see from this decision, there are rules for establishments that offer transient housing such as hotels, motels & inns in the form of the imposition of a tax, among other rules. Further there are rules for companies that "broker" those deals whereas those "brokers" have to pay a tax on their commission, among other rules. Aren’t these websites, called “room remarketers” in the applicable tax, analogous to real estate brokerage companies for landlord / tenant rentals that aren’t transient? At the least, aren’t they analogous to Airbnb in the transient setting?

In opposition, the online travel companies argued that the City was taxing “a service fee under the guise of a tax on hotel rent” and therefore the tax was improper. The Court explained that the online travel companies were incorrect. The Court stated: “[u]nder the statute, the City may tax a ‘rent or charge,’ and it may collect the tax from a hotel ‘owner . . . or . . . person entitled to be paid the rent or charge’".  Further, “the City may tax any service fee that is a ‘condition of occupancy.’”

Aren’t brokerage fees on landlord / tenant a condition of occupancy? Maybe, but maybe not. Doesn’t a condition mean that its failure prevents the result? Can a broker prevent the result? No, therein is the difference between brokerage companies and travel sites. Real estate brokers often are cut out of deals and cannot prevent occupancy in order to get paid, but instead have a claim for commission that is separate from occupancy. In fact, no Lis Pendens is available to brokers and a mechanic’s lien is only available for a lease with a term of more than 3 years for non-residential property.

However, doesn’t Airbnb do just the same as Expedia? So, will companies like Expedia try to level the playing field next by lobbying that this tax is imposed on Airbnb as well? Right now, the cost of doing business for Airbnb just got cheaper and they now have a strategic financial advantage in the City of New York. What happens next is tantalizing.  

Wednesday, November 20, 2013

Movements in LGBT Discrimination Laws

In the wake of the U.S. Supreme Court's June 26 same-sex marriage decisions, pressure has increased to expand protections under federal, state and local legislation regarding sexual orientation, gender identity and gender expression in the context of employment and housing. In the employment area, the Senate Health, Education, Labor and Pensions ("HELP") Committee has approved a bill, ENDA (the Employment Non-Discrimination Act), that would prohibit employers from discriminating against employees on the basis of sexual orientation or gender identity.

Learn more about employment and housing regulations and see the full published article here

Tuesday, November 12, 2013

Get Out Girlfriend - Evicting Your Significant Other

Guess what? If you are trying to evict a family member and you resort to a summary proceeding, it will likely be dismissed. Instead, you will end up in a prolonged ejectment proceeding in Supreme Court or in the appropriate matrimonial / family part depending on your precise circumstances. This jurisdictional result is
because Family Member Evictions are typically not available in a summary proceeding. However, should an unrelated paramour be considered a family member after all?

See the full published article here...

Sunday, November 10, 2013

Find a housing counselor - Consumer Financial Protection Bureau approves list

Learn if a mortgage is good for you, your clients &/or customers.

Housing counselors provide advice on buying a home, renting, defaults, foreclosures, and credit issues.

In NY, 2 nationally approved housing counselors are:

  1. National Federation of Community Development Credit Unions
  2. National Urban League
However, there are many local housing counselors that can be found through this tool.

After, January 10, 2014 lenders will be required to provide a list of ten (10) housing counselors to all applicants for federally-related loans.

The list will also include this warning:
"The counseling agencies on this list are approved by the U.S. Department of Housing and Urban Development (HUD), and they can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost to you. This list shows you several approved agencies in your area. You can find other approved counseling agencies at the Consumer Financial Protection Bureau’s (CFPB) website: consumerfinance.gov/mortgagehelp or by calling 1-855-411-CFPB (2372). You can also access a list of nationwide HUD-approved counseling intermediaries at http://portal.hud.gov/hudportal/HUD?src=/ohc_nint.”

No need to wait until January 10th - real estate professionals should start directing consumers to this list today.

Friday, November 1, 2013

Lieb School's Final 2013 Continuing Education Class is Now Open for Enrollment!


Instructor: Andrew M. Lieb, Esq., MPH

Storms strike New York more frequently with each passing year. Out of nowhere your smooth transaction might be blown apart through forces of nature. So, be prepared. An agent should know the nuances between different terms appearing within a Risk of Loss Clause in a contract of sale and how prepossession agreements change the playing field. An agent should understand the varying property insurance endorsements that are available for floods and windstorms. And, unfortunately, an agent must be prepared to guide their client’s relocation should their commercial property experience a total loss. In this instance, familiarity with Industrial Development Agencies and their tax saving function is required, especially if the client wishes a helping-hand in navigating land use regulations, construction and the varying municipal agencies that must approve a new development or rental. This course will drive real estate agent’s understanding of resiliency. The storm front is coming. 

VISIT www.liebschool.com for class details

This will be Lieb School's last CE class of 2013. 
CE classes will resume in March of 2014. 
Sign up quickly, before the class is full. 
If there are no seats left when you try to register, login to your account to join the waiting list.