AirBnB listing in NYC results in $1 million in fines
The two-story brick home in Flushing, New York is a million-dollar home, but perhaps not in the way the owner intended.
Just off Main Street in a residential Queens neighborhood not far from a car wash, pharmacy, and T-Mobile store, the house has old newspapers on the door, partially obscuring a yellowed notice from the New York City Department of Construction and a sign Warning that security cameras are watching.
According to public records, the house was used as an illegal Airbnb rental and people lived in the attic and basement. It’s been on the city’s radar for years, racking up infractions, complaints from neighbors and an order to vacate an illegally occupied portion of the home, city files show. In 2021 alone, the homeowner amassed $984,000 in default penalties, none of which were paid, according to a Bloomberg calculation based on city records. The same filing shows that in 2021, the most recent year for available data, it racked up far more fines than almost any other illegal Airbnb property, accounting for about 11% of all fines issued for the full year.
But it is far from alone. New York has more than 29,000 short-term rentals, and nearly a third of those are illegally listed, according to Mayor Eric Adams’ Office of Special Enforcement, which is tasked with regulating the short-term rental industry. With some of the strictest regulations in the country, New York essentially prohibits renting most apartments for less than 30 days without a renter present.
The city has staged some high-profile shakedowns against illicit Airbnb empires, slapping $8.9 million in fines in 2021. But records show only a fraction of hosts pay quickly. In fact, the files show that many had the penalties compounded. A property near the Port Authority in Manhattan, which is owned by ORJ Properties, has racked up around $170,000 in fines in 2021, according to a Bloomberg calculation. ORJ Properties, which has had some penalties vacated, did not respond to telephone and email requests for comment. A man inside the Flushing home waved away a reporter, who appeared at the door and declined to comment.
New York has wrestled with Airbnb Inc. for years over the proliferation of illegal listings and has devoted significant resources to prosecuting violators. New rules, coming into effect in May, aim to prevent properties like those in Queens from even coming onto the market. Hosts wishing to list on Airbnb or other platforms must register with the city and obtain a license to operate. Businesses can’t charge booking fees for unregistered properties, so this should help ease the pressure on the city to track down illegal listings. Units with uncorrected fire code violations or eviction orders are not eligible for registration.
The new rules are the culmination of a years-long legal battle between Airbnb and New York, one of the company’s largest domestic markets. The city has accused Airbnb of raising the already high cost of living in some neighborhoods, listing unsafe housing and pulling much-needed rental space off the market for locals.
The measures, which will come into force this spring, will tighten existing laws and introduce new rules. Hosts must provide a diagram showing all exit routes in the housing unit and show the certificate of registration, provide proof that the host is a permanent resident, and list the number of independent permanent residents in the residence. Hosts can face penalties of up to $5,000 for repeat violations.
The tightened guidelines have drawn strong objections from hosts who fear there will be a significant loss of income if they can no longer rent out their property in one of the world’s most expensive real estate markets.
“Regular New Yorkers should be able to share their home and not be targeted by the city as many families try to keep up with the rising cost of living,” said Nathan Rotman, Airbnb’s Regional Public Policy Lead. “The rules, as currently written, will prevent the vast majority of New Yorkers from listing their homes, and we urge the administration to work with our hosting community to support a regulatory framework that helps responsible hosts and opposes illegal ones.” hotel operator takes precedence.”
After a series of public hearings, the city has made the rules more flexible, including doubling the length of the registration period to four years, expanding eligible identification documents and agreeing to not require a full lease agreement during the application process.
Until the 2020 settlement of a lawsuit in which Airbnb agreed to release its hosts’ personally identifiable information, officials were often forced to weed out illegal listings through old-school detective work like looking at photos online. And fines and penalties seem to have little impact on some property owners determined to flout the rules. Nearly 75% of all violations issued by the Office of Special Enforcement in 2021 were due to failure to submit documentation to the city showing previous violations, such as: B. lack of fire protection, had been remedied.
Short-term rental licensing “has been on the city’s radar for over 10 years,” said Kathleen McGee, a partner at law firm Lowenstein Sandler and previously director of the Office of Special Enforcement under the Bloomberg administration. “It’s an administrative burden on the city for the businesses that don’t pay those fines.”
In 2019, the Office of Special Enforcement collected 21% of all fines issued, but that number dropped in 2020 as the pandemic decimated New York City. That year, officials imposed $7.4 million in penalties but withdrew just over $400,000 in payments through August 2021. The city’s reports offer only a snapshot of collection efforts at any given time, and in order to sell a home or refinance a mortgage fines must be resolved, which leads officials to believe they will eventually be paid. The city sees the Queen’s house and the ORJ Properties building as outliers.
After eight years, time is up for the city to collect the debt. But that doesn’t mean violators are off the hook.
“If you want to be a legitimate going concern, you can’t do this,” said Chris Slowik, real estate attorney and partner at Klein Slowik PLLC.
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