Tuesday, October 25, 2016

The End of Airbnb in NYC

On October 21, 2016 Governor Cuomo signed a bill into law that amends the New York State Multiple Dwelling Law (“NYSMDL”) and the New York City Administrative Code to prohibit the advertising of certain New York City residential rentals with lease terms of less than 30 days. Although many short-term rentals in New York City are already illegal in order to prevent dwelling units from being used as transient hotels in violation of fire and building codes and other regulations, this law makes it clear that the advertising of such rentals is also prohibited. Now that this bill has become law, those who list rentals on Airbnb and other short-term rental websites may face a fine of up to $1,000 for the first violation, $5,000 for the second violation, and $7,500 for the third violation and any subsequent violations.

In 2010, the NYSMDL was amended to ban short-term rentals with terms of less than 30 days for class A multiple dwellings, which are dwellings used as permanent residences where each dwelling is occupied by three or more independent families. A dwelling is considered a permanent residence if it is occupied by the same natural person(s) for a period of 30 consecutive days or more.

Three exceptions exist to the 30-day restriction for class A multiple dwellings rentals. First, occupants who cohabitate with boarders or lodgers are exempt because they are sharing the space in a license scenario rather than granting exclusive occupancy in a lease, which is a prerequisite  to the applicability of the prohibition on short-term rentals. Next, where the occupants live in the class A dwelling for less than 30 days, but do not pay the permanent occupants for their stay, the restriction is also inapplicable. This situation occurs frequently when friends or family members stay at the residence when the owner is not home. Finally, class A multiple dwellings explicitly do not include hotels, rooming houses, boarding houses, club houses, and school dormitories.

There are also exemptions for some Class A dwelling units that are grandfathered from the prior law. This grandfathering occurred where a Class A dwelling was constructed before a specific date and was historically and continuously used for purposes other than as permanent residences. These units were allowed to convert to Class B (which is a class that includes, but is not limited to, hotels, rooming houses, boarding houses, club houses, and college dormitories) within 2 years after the effective date of the 2010 law if the owners could obtain a Class B certificate of occupancy and complied with all of the conditions and requirements within this 2-year conversion period. However, since these conditions and requirements were quite stringent, many such dwellings did not qualify for this conversion. Furthermore, those that did not convert to Class B by 2012 have missed their opportunity.  

Despite the 2010 law, short-term rental websites such as Airbnb have proliferated, each allowing individuals to list their apartments on these websites for short periods which inherently violate the NYSMDL. Under this new law, New York legislators have stopped the proliferation of these advertisements in their tracks.

The NYSMDL only applies to cities with populations of 325,000 or more. Realistically, this means that NYSMDL only applies to New York City, since it is the only city in the state with  a population of 325,000 or more. This new law essentially marks the end of short-term listings on Airbnb in New York City. In the war against short-term rentals that operate as illegal hotels, New York legislators has won its latest battle.