When it comes to violations issued by the Department of Buildings (DOB), landlords risk the possibility of thousands of dollars in fines and, in extreme situations, complex litigation initiated by the City [1]. If the City suspects an illegal transient occupancy, they will send a DOB inspector to the building to investigate and issue DOB & Environmental Control Board (ECB) violations [2].
Landlords should be beware if they or their tenants are renting out their apartments via Airbnb to transient guests, then the landlord could be on the hook for violating the Multiple Dwelling Laws (MDL) as well as the Housing and Administrative City codes. More specifically, the landlord could be issued a violation, fines and further penalties from the DOB.
In the month of January 2019, the DOB issued 40 violations and $374,154 in penalties, including daily penalties, issued for illegal transient use of buildings at eight different locations [3]. Additionally, the DOB issued $66,250 in total penalties to 138 Blossom Inc., the owner of 134-34 Blossom Avenue, Queens, for illegal transient use violations [4]. The DOB also fined the owner of 321-3 West 47th Street Assoc., L.P., owner of 321 West 47th Street, Manhattan, for the illegal transient use of three apartment units occupied as illegal in the amount of $23,500 in total penalties [5].
Landlords should be concerned about being issued a DOB violation because the DOB will hold landlords liable regardless of whether the landlord was aware that the tenant was engaged in illegal Airbnb activity. The New York City Administrative Code §28-210.3 makes it unlawful for any person or entity who owns or occupies a multiple dwelling or dwelling unit classified for permanent residence purposes to use or occupy, offer or permit the use or occupancy or to convert for use or occupancy such multiple dwelling or dwelling unit for other than permanent residence purposes [6]. The City essentially uses the word “permit” to levy fines and initiate litigation against out of possession landlords who had no knowledge of their tenants’ activities [7]. For example, in The City of New York v. NYC Midtown LLC, the City imposed a fine on the owner of a three floor walk-up building for a three-day Airbnb occupancy occurring in one of the units behind the landlord’s back [8].
As stated earlier, the DOB will hold a landlord liable if the landlord advertised or rented a unit/building out to transient guests for periods of 30 days or less. The Administrative Code puts the building’s owner as ultimately responsible for keeping the property in an all code-compliant manner, even if its tenants caused the violating conditions and it had no knowledge of the tenants’ actions [9]. A NY Court found that building owners cannot claim ignorance if inspectors find that tenants used online sites to rent out their units for short-term stays [10]. Further, the court affirmed fines in the amount of $52,100 for the illegal conversion of residential units into hotel rooms [11].
If the DOB inspects and finds that even one apartment is violating the short-term leasing law, then it can issue violations that result in fines to the landlord [12]. In another example, a NY Court required a landlord to pay a $1.2 million lump sum fine for illegally converting a 4 story rent stabilized walkup building into an illegal hotel for Airbnb rental purposes [13]. The DOB also imposes fines on landlords for reporting tenants that engage in illegal Airbnb activity [14].
What Exactly is At Stake for Landlords?
As mentioned earlier, landlords risk thousands of dollars of fines, further penalties and the possibility of complex litigation initiated by the city [15]. These violations can result in thousands of dollars in fines and legal fees, and City will not issue just a single violation. If the City finds that a tenant’s landlord is running an illegal hotel, then the City will not only issue violations for an illegal transient occupancy, but also several fire safety violations [16].
In extreme situations, where there are numerous and continuous transient occupancy violations, the City may bring a nuisance abatement action against the landlord. A nuisance abatement action is a lawsuit against the landlord and the building itself, which is known as an in rem proceeding or a legal action against a physical space. In these types of actions, the City alleges that pervasive illegal transient occupants constitutes a threat to public safety, health and welfare [17].
The courts are relatively deferential to the City’s legal position, with one judge even commenting that illegal transient occupancies presents a situation where “people’s lives are at risk.” [18] In these nuisance abatement actions, the City also seeks millions of dollars in damages, permanent injunctions against illegal short-term occupancies in the subject buildings, and court appointed receivers to manage the buildings. These injunctions are especially troublesome because if a tenant, without the landlord’s knowledge, illegally rents her apartment via Airbnb, then the landlord can be held in civil and criminal contempt of court, which can result in additional fines and potentially incarceration [19].
The information above is intended to provide limited information only and is not legal advice. The laws relating to ECB and DOB violations are complex especially in the context of illegal Airbnb activity. If you are a party to a matter concerning ECB or DOB violations in the context of Airbnb rentals, or otherwise need further guidance in this or a related area of law, SINGH & RANI, LLP can assist you.
[1] https://www.kingscountypolitics.com/city-puts-onus-landlords-tenants-rent-airbnb/
[2] Id.
[3] January 2019, DOB Enforcement Bulletin.
[4] Id.
[5] Id.
[6] New York City Administrative Code §28-210.3
[7] https://www.kingscountypolitics.com/city-puts-onus-landlords-tenants-rent-airbnb/
[8] The City of New York v. NYC Midtown LLC, NY Slip Op 31596 (U) (Sup Ct. NY Cty. 2017).
[9] See NYC v. Mosco Holding LLC (ECB Appeal No. 1500169, April 30, 2015)
[10] Matter of 42/9 Residential LLC v New York City Envtl. Control Bd., NY Slip Op 07052 (App Div. 1st Dept. 2018).
[11] Id.
[12] Id.
[13] https://ny.curbed.com/2017/5/15/15640712/airbnb-nyc-lawsuit-lower-east-side
[14] https://commercialobserver.com/2017/08/how-the-city-nails-landlords-for-their-tenants-illegal-airbnb-rentals/
[15] https://www.kingscountypolitics.com/city-puts-onus-landlords-tenants-rent-airbnb/
[16] Id.
[17] Id.
[18] Id.
[19] Id.
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