Mayor’s Office of Special Enforcement Brings Lawsuit Over Illegal Short-Term Rental Operation

According to the Office of Special Enforcement, all of the units at 200 East 116th Street were converted into illegal short term rentals. Image Credit: Google Maps

The lawsuit claims that at least 130 apartments were converted into illegal short-term rentals. On January 14, 2019, the Mayor’s Office of Special Enforcement announced that it filed a lawsuit against several defendants for converting apartments in 35 residential buildings into illegal short-term rentals through websites like Airbnb. The defendants include Metropolitan Property Group (MPG), five current or former MPG employees and 18 associated corporate entities. The lawsuit was filed on January 14, 2019, in New York State Supreme Court.

In 2016, New York State enacted Chapter 396, which “prohibited advertising that promotes the use of dwelling units in a class A multiple dwelling for other than permanent residence purposes.” Class A multiple dwellings are defined under state law as different types of apartments and apartment buildings that are used for only permanent residence purposes. Chapter 396 also provides the Mayor’s Office of Special Enforcement with authority to enforce the law within New York City.

The Office of Special Enforcement identified five buildings with at least 138 short term rental listings, which are located at 200 East 116th Street in East Harlem; 123 East 54th Street in Midtown East, 207-215 East 27th Street, 230 East 30th Street and 2118 3rd Avenue in Kips Bay. The building at 200 East 116th Street was entirely converted to short term rentals. The Office of Special Enforcement estimated that the defendants advertised short term rentals in 30 other buildings in Manhattan since 2014.

The Office of Special Enforcement investigation determined that the defendants conducted 13,691 short-term rental transactions for over 75,000 guests. These guests were not aware of the illegal nature of the rentals. To facilitate these rentals, the City alleges that the defendants created fake identities, multiple host accounts, omitted location information and obstructed both enforcement and the consumer’s ability to access information and reviews. The City alleges that the defendants received at least $20.7 million in short-term rental revenue from 2015 to 2018 just on Airbnb.

In the press release, Mayor Bill de Blasio said, “Illegal hotels take precious housing away from New Yorkers and destabilize our communities. My administration is cracking down on corporate operators to ensure residents and visitors are safe and are treated fairly.”

Christian Klossner, the Executive Director of the Mayor’s Office of Special Enforcement, said “Over and over again, well-meaning visitors are being misled by sophisticated businesspeople into booking illegal rentals. Only with better data and cooperation from the booking websites can we efficiently identify and shut down these operations. Our top priority is preserving housing and a sense of community in New York neighborhoods, and we want guests to feel safe when they visit our city.”

Several elected officials voiced their support of the lawsuit. City Council Speaker Corey Johnson said “These egregious violations are prime examples of just how serious the illegal hotel problem is in our city. I commend OSE [The Mayor’s Office of Special Enforcement] for their stellar work and look forward to further strengthening our enforcement tools so that we may meet this challenge head-on. This Council will continue to combat the illegal hotel problem to increase public safety and protect our affordable housing stock.”

Manhattan Borough President Gale Brewer stated “Illegal hotels are dangerous and further diminish New York City’s already-scarce housing supply. I’m glad that the Office of Special Enforcement is being proactive in targeting bad actors.”

Assembly Member Harvey Epstein stated “The defendants named today should be ashamed of the scheme they were allegedly perpetrating, which jeopardized the health and safety of tenants and guests, and worsened the city’s affordable housing crisis by taking units off the market in my district, and in other neighborhoods across the city. I applaud the Office of Special Enforcement for its role in keeping both tenants and visitors to our city safe, and for the clear message it is sending to bad actors: breaking laws to put profit over the safety of guests and tenants while wiping out our city’s affordable housing stock will never be an acceptable business model.”

To read the press release, click here. To read the complaint, click here.


By: Veronica Rose (Veronica is the CityLaw Fellow and a New York Law School Graduate, Class of 2018.)



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