As the price of living in New York City (“NYC”) increases, many New Yorkers are turning to a new lucrative way to make some extra money: renting their apartments to strangers for a short-term period of a few days to a few weeks. With the emergence of online short-term rental websites such as Airbnb, Wimdu, Home Away and Craigslist, it has become increasingly easier and seemingly more legitimate for New Yorkers to market their apartments on a short-term basis. New Yorkers using these websites as hosts can rent a bedroom or part of their apartment for as much as $300.00 a night or $109,500.00 a year, much more than renting an apartment out on a monthly or yearly basis can yield. Although these short-term rentals may seem like an easy and fast way to capitalize on having a spare couch or bedroom, many New Yorkers fail to realize that the very act of renting to people on a short-term basis is usually completely illegal.
According to the NYC Multiple Dwelling Law, residential apartments in NYC are generally classified as “Class A” multiple dwellings. “Class A” multiple dwellings are dwellings which are primarily used for permanent residence purposes. Examples include apartment houses and apartment hotels. In comparison, a “Class B” multiple dwelling is occupied transiently and includes hotels, boarding houses and college dormitories. Under the city law, visitors to New York can only legally rent or stay short-term in “Class B” multiple dwellings. Short-term is defined under NYC law as a stay for less than 30 days. However, there is one major exception to this general rule: family. Under the multiple dwelling law, family is very broadly defined as a person occupying a dwelling and maintaining a household, with not more than four borders, roomers or lodgers, or two or more persons occupying a dwelling, living together and maintaining a common household. Thus, hosts can very easily evade detection by informing their managing agent or doorman that a friend is simply staying with them for a few weeks. Additionally, it is not illegal to rent a room if the host is also occupying the apartment at the same time and all parts of the apartment are available to the renter. Nevertheless, while this exception exists for the city law, short-term rentals falling under this exception may still violate many New Yorkers’ lease agreements as well as their building’s own rules and by-laws.
But despite the technicality of the laws, why is it important for New Yorkers thinking about renting their apartments on a short-term basis to think twice about doing so? In law school, law students are always taught to think about the public policy behind a law and the real world implications of why its passage is necessary to society. For many of the larger condos and co-ops in NYC, there are rules against renting apartments or portions of apartments on a short-term basis because the boards of the buildings wants to ensure that the people living in the buildings are stable and familiar to their neighbors. For many rental buildings in NYC, the rules against short-term rentals are more based on fire-safety and health code rules since “Class B” multiple dwellings must comply with special fire-safety and other types of rules. Former Mayor Bloomberg acknowledged this when the law was initially passed in 2010 and stated: “When housing designated for permanent occupancy is illegally converted into a hotel, unsafe conditions are created, the residential character of City neighborhoods is harmed and the supply of much-needed units of housing is depleted.”[Statements of Gov. Paterson and Mayor Bloomberg]
The laws against short-term rentals also protect the permanent owners/renters in these buildings as well as the visitors. When people travel on vacation, they tend to drink, relax and to carry cash, making these visitors more susceptible to being targets of crime and fraud. Hotels and other “Class B” multiple dwellings understand this and take special security precautions to prevent visitors from becoming victims. Additionally, if any harm comes to these visitors, both the renter and landlord will be liable if the building is a rental and both the owner and condo/co-op may be liable if the building is a condo or co-op.
As a result of the strong public policy against short-term rentals, the New York State Attorney General is investigating websites such as Airbnb. In addition to sending complaints to the Attorney General, New Yorkers can also report any suspected hosts to 311. Once an illegal hotel is reported to 311, a city task force has to investigate the complaint and can fine the host anywhere from $1,000.00 to $5,000.00, if not more. Thus, although short-term rentals may seem like a legitimate and simple way to make some money, the costs can greatly outweigh the benefits. Before renting an apartment on a short-term basis in NYC and acting as hosts on any short-term rental websites, New Yorkers should make sure they completely understand not only the city dwelling law, but have also thoroughly read their leases and any by-laws and regulations of their buildings. With legal issues for the various short-term rentals websites mounting in NYC, this issue is only bound to grow and become more complicated in the future.
Written by Maria Cheung
