News and Articles

Potential New York State and City Legal Violations Arising From Hosting Guests Using Airbnb

Erin Lloyd - Thursday, January 29, 2015

    Users of the online service Airbnb beware: there have been a flurry of lawsuits against New York hosts using the popular Internet service to accommodate guests, and careful consideration of all relevant legal regulations and laws is important to understand your risks and liabilities. The New York State Attorney General has taken the position that hosts using Airbnb’s website—or others like it—to accommodate guests are responsible for understanding the laws of their own locales and complying with them.[1] For this reason, it is important that New Yorkers using or intending to use Airbnb are aware of the potential legal repercussions and seek legal advice before agreeing to host guests. 

    First and foremost, this article provides a basic introduction to some of the New York laws that Airbnb hosting can conflict with and some of the risks posed by hosting guests in exchange for money in New York, and is not a substitute for individual legal advice. Due to the variety of housing situations throughout the City, any New Yorker considering hosting Airbnb travelers for any period of time should always consult legal counsel to ensure that their particular housing situation is or will be or is in compliance with all applicable laws. This article may not be relied on as legal advice. 


Airbnb Hosts May Not Violate the NYC Building Code if They Have a Permanent Resident Co-Occupy the Residence During the Traveler’s Stay

    In some scenarios, New Yorkers may legally host guests using Airbnb’s services—at least under the New York City’s Building Code. The NYC Building Code permits Airbnb hosts to accommodate long-term residents, assuming there are no other legal restrictions on the rental, such as the apartment being rent controlled/stabilized or Mitchell-Lama housing which will be discussed more below. New York law defines a “long-term” resident as a person who lives in a residence for more than thirty days. Hosts should be aware that any guest or roommate that occupies the apartment or house for thirty days or more will be classified as a “permanent” resident or occupant, which can entitle the traveler to occupancy rights just as much as if the host met a longer-term roommate on Craigslist or some other source. For this reason, hosts should always seek legal counsel to understand the full extent of their own and their renter’s or roommate’s legal rights, obligations, and liabilities in this scenario. 

    Generally, hosts that rent a room to a traveler for less than thirty days will not be fined under the New York City Building Code if a “permanent resident” (someone who is living in the space for at least thirty days) is also present while the home is occupied by the traveler. This was the Environmental Control Board’s finding in New York City v. Abe Carrey.[2] If no permanent resident occupies the home with the traveler, New York State Law prohibits short-term rental of apartment space (less than 30 days) unless the property is a licensed hotel or bed-and-breakfast. 

    Again, it is extremely important to note that although a host may not be fined for violations of the Building Code, they could still face other fines—or even eviction—if the host-tenant is found to have violated rent-regulations laws, tax laws, or terms of their residential operating agreement (e.g. leases, condominium contracts, and cooperative shareholder contracts). Due to the complexity of the law and the variety of circumstances, it is recommended that any host using or seeking to use Airbnb, review—with the assistance of an attorney—all applicable State and City laws as well as the terms of the document(s) governing their housing situation.


Airbnb Hosts That Live in Rent Controlled, Rent Stabilized, or Mitchell-Lama Housing Should Think Twice Before Accommodating Travelers

    Hosts living in rent controlled, rent stabilized or Mitchell-Lama housing must also be aware of other laws (independent of the NYC Building Code) that affect the rental of their apartment to travelers. In a recent case, a tenant paying $4,193 per month for a rent controlled four-bedroom apartment in Manhattan was found to be in violation of City and State laws because she rented the unused rooms each month and made about $6,500 per month. In addition to taking the tenant to court to halt her rental of rooms in the apartment, the building owner also sought to evict her based on her violation of the rent control law, which prohibits tenants in rent controlled apartments from earning more money than they legally pay for rent. These types of housing accommodations are traditionally intended to provide low-cost housing, and tenants who exploit low-cost housing to “profiteer” can be found in violation of the law.

    If a host rents out a rent-regulated apartment while they are not occupying it as his or her primary residence, they have engaged in an unauthorized sublet. In this situation, it is illegal for the primary tenant of the residence to rent the space—or in some instances even a portion of it—for a price over the legal rental value.[3] Under these circumstances, the primary tenant of a rent-regulated apartment may be evicted.[4] On the other hand, some courts have determined that a landlord cannot evict a tenant for charging his or her roommate(s) a disproportionate amount of the legal rent as long as the tenant cures the overpayment (in that case by refunding the excess charged rent to the roommate).[5] Residents of Mitchell-Lama housing are generally prohibited from renting their apartment to travelers.[6] Although the result is not always the same, courts that have addressed these cases have tended to evict the host-tenant for profiteering.

    As stated before, though a host in these situations may be in compliance with the NYC Building Code, violations of a residence’s rent-regulated status is an independent violations of the law that can potentially result in the tenant’s eviction. For this reason, hosts residing in rent-regulated apartments or Mitchell-Lama housing should think twice before deciding to rent space in their apartment and, again, should always seek advice from an attorney before proceeding.


Airbnb Hosts in Non-Regulated Apartments Should Consult the Terms of Their Lease, Cooperative, or Condominium Agreement Before Accommodating Travelers

    Airbnb hosts in private, non-regulated apartments may also risk violating the terms of their lease, cooperative, or condominium agreement when they rent their space to travelers. For instance, most leases require tenants to receive written consent from their landlord before renting all or part of their apartment to a non-tenant. A tenant can be faced with an eviction for violating the terms of their lease. Because of the landlord’s discretion in deciding whether to initiate such a proceeding, tenants should carefully read the terms of their lease with an attorney and seek written permission from their landlords—where required—before hosting Airbnb travelers to ensure compliance with the terms of their lease.

    Similarly, occupants of cooperatives and condominiums risk violating the terms of their respective residential operating agreements by hosting travelers without reviewing these documents. The directors of residential housing cooperatives always have the right to approve or deny the transfer of shares and the assignment of proprietary leases (assuming they do so in a non-discriminatory fashion).[7] Likewise, many condominium agreements have a right of first refusal provision that a host’s rental of their condominium can potentially violate. For these reasons, hosts should take care to check over their applicable residential operating agreement to ensure that their rental of the space to travelers is permissible.


All Airbnb Hosts Must Abide by New York State and Local Tax Laws

    Finally, Airbnb hosts must be aware of any applicable New York tax laws. The New York Attorney General’s report on the use of Airbnb in New York notes that hosts who rent out a unit or portion of it short-term must pay applicable hotel taxes.[8] These New York City tax laws are notoriously complex and difficult to understand. According to the Attorney General’s report, the Airbnb host is liable for a portion of the hotel tax and must collect and pay it unless the rental is of one room in an owner-occupied home, the rental is less than fourteen days or for fewer than three occasions per year, or involves a rental for a continuous period of 180 consecutive days. The report also indicates that sales taxes and New York City Unincorporated Business Taxes may also apply to these short-term Airbnb rentals. In order to ensure compliance with these various tax laws, make sure to discuss your housing situation with your attorney.

    Currently, Airbnb is pushing for legislation that will allow at least some tenants to host temporary travelers in their homes without running afoul of New York State or City laws that tenants are currently at risk of violating. As of this writing, however, no such legislation has been enacted.


Conclusion

    Because of the interaction of numerous New York City and State laws that apply to Airbnb rentals, hosts should proceed cautiously and seek an attorney’s help before renting space in their home. Tenants who fail to ensure compliance face a variety of potential penalties, from fines to eviction. Discussing these various laws with an attorney will ensure that you comply with them and are able to keep your home.

 

Erin Lloyd, Esq. is an employment and business lawyer and partner at Lloyd Patel LLP, a general practice law firm. Ms. Lloyd works closely with each client to develop a personalized strategy based on his or her individual needs and concerns.  She can be reached at el@lloydpatel.com or (212) 729-4266. For more information on Lloyd Patel LLP, visit their website at www.lloydpatel.com.

 

Samuel Gaulthier is a second year law student at City University of New York School of Law focusing on criminal and administrative law, and an intern at Lloyd Patel LLP. Mr. Gaultier expects to graduate with his J.D. in May 2016.



[1] Airbnb even acknowledges this risk on its own website: https://www.airbnb.com/help/article/376.

[3] See Brookford, LLC v. Penraat, 2014 WL 7201736 (NY County Sup. Ct. 2014) (rent controlled apartment); See also 220 West 93rd St., LLC. v. Stavrolakes, 2006 WL 4758817 (NY County Sup. Ct. 2006) (holding that a rent controlled tenant who profiteers can be evicted).

[4] Continental Towers Limited Partnership v. Freuman, 128 Misc.2d 680, ___ (App. Term. 1st Dep’t 1985) (holding that a primary tenant can be evicted for subleasing the whole or part of their rent-stabilized apartment for an amount in excess of the legal rental value of the residence).

[5] See 520 East 81st Street Associates v. Roughton-Hester, 157 A.D.2d 199, ___ (1st Dep’t 1990) (holding that a landlord cannot evict a primary tenant for overcharging a roommate in a rent stabilized apartment if the violation is remedied); See also 270 Riverside Drive, Inc. v. Braun, 4 Misc.3d 77 (App. Term 1st Dep’t 2004) (holding that a primary tenant in a rent controlled apartment cannot be evicted for collecting rent from two roommates in excess of the rent controlled cost of the residence if the violation is remedied); See also Giachino Enterprises LP. v. Inokuchi, 7 Misc.3d 738, ___ (Civ. Ct. 2005) (holding that a tenant cannot be evicted for overcharging their roommate in a property subject to the NYC Loft law if the violation is remedied).

[6] See Padilla v. Levy, 300 A.D.2d 62, 62-63 (1st Dep’t 2002)

[7] See Bachman v. State Div. of Human Rights, 104 A.D.2d 111, 114 (1st Dep’t 1984)

[8] Research Department and Internet Bureau, Office of the Attorney General of the State of N.Y., Airbnb in the City, 18-20 (2014), http://www.ag.ny.gov/pdfs/Airbnb%20report.pdf.


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