The State of New York has been cracking down on Airbnb activity in NYC by implementing laws prohibiting the rental of most apartments for a period of fewer than 30 days in Class A multiple dwellings or buildings that are occupied for permanent residence purposes. Tenants caught in the act of illegally subletting their apartment to transient guests may be subjected to eviction. A common question that arises is whether the tenant may be given the opportunity to cure the violation before being subjected to eviction.
Generally, New York courts have found that in the case where the tenant substantially profiteered from their Airbnb activity, the courts will not permit a tenant to cure the violation before being subjected to eviction [1]. In other words, unlike other housing court proceedings where the tenant may be permitted to cure or stop engaging in a prohibited activity in order to avoid being evicted, in cases where a tenant has substantially profiteered from Airbnb activity, the tenant does not have the option to cure or to stop subletting their apartment through Airbnb before being evicted. Further, New York courts have held that where rent-regulated tenants rent out their apartments to transient individuals at rates higher than allowed by applicable law are engaged in the conduct in the nature of subletting rather than taking in roommates, and engaged in conduct in the nature of profiteering, which is an incurable violation, for which no notice to cure is required [2].
Accordingly, the question arises, what is considered substantial profiteering? There is no definitive answer to that question but generally courts look to the nature of Airbnb activity such as the number of times the apartment was subleased and whether the tenant charged rates higher than allowed by law. Further New York courts have stated that it can determine whether a rent regulated tenant has profiteered by totaling the income the tenant generated from subletting and comparing that sum with the aggregate of the tenant’s daily rent for the same number of days that the tenant sublet [3].
New York courts have also held that tenants may not cure when they collect more from subletting than they owe in rent [4]. By contrast, a rent-regulated tenant who overcharges a subtenant is not subject to eviction where his/her conduct does not rise to the level of profiteering [5]. Therefore, the takeaway is that in that in the context of Airbnb, a tenant that substantially profiteered by overcharging subtenants may not be permitted to cure before being subjected to eviction. However, if a tenant did not profiteer in a substantial nature, then he or she may be permitted to cure the violation before being subjected to eviction.
A finding of an incurable violation also may arise when an apartment is commercialized for Airbnb purposes [6]. Recently, a NY court found the existence of commercialization of an apartment for Airbnb purposes when the tenant listed her rent stabilized apartment on Airbnb at nightly rental rates of $200 per night, entered into more than one dozen separate rentals totaling 79 nights in 10 months, and collected four times the tenant’s daily rent [7]. Additionally, in a recent New York Supreme Court decision, the court sided with the state who sought to enjoin the owner of 4 story walk up that advertised and rented out various units in the building through Airbnb to transient guests for periods of less than 30 days, finding that such activity violated both New York State Multiple Dwelling Laws and sections of the Administrative Code of the City of New York [8].
Although it may seem as though tenants have no recourse in the context of violations resulting from Airbnb rentals, NY courts don’t always permit the landlord to evict the tenant solely due to the existence of Airbnb advertising [9]. Further, evidence in the form of print outs of Airbnb activity alone do not provide a basis for determining that the nature and frequency of the rentals amounted to profiteering, which would warrant termination of the lease [10].
Additionally, a few years ago, New York passed legislation designed to combat the rise of short-term rentals in NYC, such as a law requiring Airbnb to disclose data each month about people who use Airbnb to host or rent out their apartments to transient visitors. However, in January 2019, a preliminary ruling by a federal judge enjoined New York’s law requiring Airbnb to turn over such data [11]. Although the ruling is not final yet, it could be a favorable ruling for Airbnb and other similar services in the future.
The information above is intended to provide limited information only and is not legal advice. The laws relating to Airbnb activity in the context of rent-regulated tenants are complex and novel. If you are a party to a matter concerning eviction due to Airbnb activity or you are a party that suspects a tenant of engaging in illegal Airbnb activity and otherwise need further guidance in this or a related area of law, SINGH & RANI, LLP can assist you.
[1] Brookford LLC v. Penraat (Sup. Ct. NY Cty. 2014).
[2] 498 W. End Ave. LLC v. Reynolds (NY Civ. Ct. 2018) (citing Aurora Assocs. LLC v. Hennen, 157 A.D.3d 608 (1st Dept. 2018)).
[3] 498 W. End Ave. LLC v. Reynolds (NY Civ. Ct. 2018) (citing Goldstein v. Lipetz, 150 A.D.3d 562, 565 (1st Dept. 2017).
[4] 230 E. 48th St. LLC v. Campisi, 59 Misc.3d 148(A) (App. Term 1st Dept. 2018)
[5] Id.
[6] Id.
[7] Id.
[8] City of NewYork v. Baldeo NY Slip Op 30504(U) (Sup. Ct. NY Cty. 2019)
[9] Aurora Associates LLC v. Hennen 157 A.D.3d 608 (1st Dept. 2018)
[10] Id.
[11] https://www.reuters.com/article/uk-airbnb-lawsuit/judge-blocks-new-york-city-law-requiring-airbnb-to-hand-over-user-data-idUSKCN1OX19L
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