New York's Cooperative and Condominium Community

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Illegal Hoteling: What's the Latest on the Legal and Legislative Fronts?

New York City, The South Star, 80 John Street

May 12, 2014

"It's become a cottage industry," says Dennis H. Greenstein, a partner in the law firm of Seyfarth Shaw and a co-chair of the New York State Bar Association's committee on cooperatives and condominiums. "In the past few years, we've been hearing about apartments subletting or renting for very short terms. In co-ops, they're not getting the required board approval. In condos, they're ignoring the board's right of first refusal and the bylaws. Sublet fees are lost, and there are safety issues for other tenants. It upsets people in the building when they don't know who the new people are."

Last fall, state Attorney General Eric Schneiderman took notice, issuing subpoenas for the records of the popular website Airbnb, after speculating that the estimated 15,000 New Yorkers who have rented their apartments through the site are costing the state millions of dollars by dodging the 5.8 percent hotel-occupancy tax.

But the company mounted a counteroffensive, and by early this year nearly 250,000 people had signed a petition to legalize short-term rentals in the city.

Attorneys Being Made Aware

At a continuing education seminar offered by the bar association earlier this year, Greenstein gave a talk on the issue that attracted more than 200 lawyers. He told his audience that it can be difficult to spot illegal short-term rentals, especially in larger buildings, but sometimes a board's job is made easier because short-term renters make themselves almost comically apparent.

"The telltale signs are seeing people coming in with luggage on a regular basis," he says. "We've even heard of people coming down and asking the doorman for fresh towels, or where the restaurant is."

But smart co-op and condo boards understand that having an unauthorized hotel in the building is no laughing matter. "I feel strongly it's a very serious safety issue to have unscreened, unknown people coming and going in a building," says Patrick Kennell, board president of The South Star condominium in lower Manhattan. "Particularly in a building like ours, where we have a lot of children. It's not funny. Boards need to take it very seriously."


Adapted from "A Home, Not A Hotel" by Bill Morris (Habitat, May 2014)

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