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That "Major" Airbnb Court Ruling? Not So Major After All; Airbnb Just a Side Issue

Frank Lovece in Legal/Financial on June 27, 2014

33 Gold Street, Financial District, Manhattan

June 27, 2014

"I'm thinking of suing the Post," attorney Kent Gubrud — who won the case involving a tenant who occasionally rented out her apartment via Airbnb — told Habitat. "They could at least correct the online [version of the] story," he says, maintaining he spent "seven or eight hours explaining the many errors in writing to the Post reporter."

The story, which appears online as "Judge Nixes Airbnb Subletter's Eviction," accurately reported that in a June 16 ruling, Justice Jack Stoller of Manhattan Housing Court disallowed the attempted eviction of free-market renter Kimberly Freeman, who had used the listings website Airbnb to occasionally rent all or part of her 33 Gold Street apartment to visitors. "[T]he court does not find that the enactment of statues designed to prevent rental property from being used for hotel purposes prevents respondent from being able to cure such activity," the paper quoted from the decision (available here). Freeman did cure the activity — when told to stop, she did so — but the landlord tried to evict her anyway, which was  all that the judge was addressing.

Yet the Post story — which opens with the remarkable claim that the ruling "could open the floodgates for Big ­Apple apartment dwellers to sublet via the controversial home-share website Airbnb" — contains inaccuracies and misinterpretations. In one instance, the paper says Freeman "admitted breaking New York City law." But nowhere in the judge's decision is there any reference to such an admission, and Gubrud says his client never said such a thing. And as well the judge did not rule on the legality of Freeman's rentals — he ruled on a simple notice-to-cure issue.

He Never Said It

Much more significant is the newspaper's claim that "the judge also said that once a landlord tells renters to stop the practice, they must comply." But Judge Stoller judge did not say this in his decision, either in those words or similar. 

"It's bizarre," attorney Steven D. Sladkus, a partner in Wolf Haldenstein Adler Freeman & Herz, who is unconnected to this case, says of the phrase, "because it's saying [that the judge said] the law should be overlooked unless you're caught."

And this extraordinary claim that the judge never said was repeated in much subsequent reporting of the case. "Stoller said tenants still must stop using Airbnb if confronted by their landlord," wrote the New York Business Journal. "Renters must comply, however, after a landlord tells them to stop subletting," said The Real Deal. "Once a landlord tells a tenant to stop subletting, they must," wrote "[T]he judge said a tenant must stop renting out an apartment for short-term stays once a landlord discovers it and tells the tenant to stop," said

MDL Not a City Law

Another major misimpression from the Post story comes the paper's out-of-context passage that the "ruling means that Kimberly Freeman can stay in her rental apartment …because the city law [sic] that prohibits short-term sublets applies only to landlords. The [state's] Multiple Dwelling Law is 'generally aimed at the conduct of owners of property, not tenants,' Stoller wrote."

"It generally has been aimed at owners at properties, but that doesn't mean it's limited to owners," says Sladkus. "It's just that most of the cases happen to have been aimed at owners. That's like saying most speeding tickets are given to people in bright red cars. It doesn't mean the law doesn't apply to people in differently colored cars."

And the ruling didn't come out of the Multiple Dwelling Law in any case, because this was an eviction attempt, which doesn't fall under the MDL: It falls under a multitude of other statutes, with the judge in this case specifically citing New York State's Real Property Actions and Proceedings Section 753. In other words, the Multiple Dwelling Law was irrelevant in this notice-to-cure case.

Precedential Timbre?

So is this a "potentially precedent-setting ruling," as the Post story said and as others then reported? Only in the sense that almost any ruling is potentially precedent-setting. "The judge's decision was limited," Gubrud says. "It was a narrow ruling," involving an eviction procedure, "but the Post made it out to be a lot bigger than I think it really is." 

A landlord believed a tenant was violating the lease. He told her to discontinue her actions. She complied  — and he tried to evict her anyway. It just happened to be about short-term rentals, but it could have been about keeping her bike in the hallway, or playing loud music after 11 p.m. or any number of possible lease violations that a tenant can cure and in this case did. The ruling simply follows real-property law, and doesn't suddenly give the go-ahead for tenants to turn their apartments into hotels.

Even the guy who won the case says that. The judge, says Gubrud, "was talking about the notice-of-cure issue, not about short-term-renting prohibitions."


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