Mayor Sues to Shut Down Complex Illegal Short-Term Rental Operation

Mayor Eric Adams and New York City Mayor's Office of Special Enforcement (OSE) Executive Director Christian J. Klossner recently announced a new lawsuit to shut down an illegal short-term rental operation at a building located in Turtle Bay.

One level deeper: According to the lawsuit, a licensed real estate broker and the building owner used a number of LLCs they control to run a complex and illegal short-term rental operation utilizing online lodging websites such as Airbnb. Between January of 2018 and March of 2022, Airbnb records show that the platform disbursed $2 million in payments to the broker for short-term rentals at six buildings throughout the city, including at least $987,729 from the building targeted in the lawsuit. During this timeframe, the broker used more than 26 distinct host accounts, operated more than 78 listings, conducted more than 2,200 transactions, and deceived more than 6,500 guests in violation of Airbnb’s “One Host, One Home” policy for the city.

The lawsuit alleges that the defendants continued to run their unlawful operation despite multiple enforcement efforts from the city, which issued violations for the illegal short-term rentals and for the building's numerous hazardous conditions, including an inadequate fire alarm system, an inadequate fire sprinkler system, and a failure to provide required means of egress.

What you need to know: The lawsuit represents the city's first lawsuit against a short-term rental operation identified using data obtained through the city's Local Law 146 of 2018, amended by LL 64 of 2020, which requires online short-term rental platforms to regularly report data on bookings to the city.

"This operator used fake names, false addresses, and a smokescreen of LLCs to attempt to hide this illegal operation, but will now be held accountable," said Christian Klossner, executive director, Mayor's Office of Special Enforcement. "This lawsuit underscores the necessity of robust reporting requirements for booking platforms, and why the city needs the short-term rental registration program that will take effect in 2023."

New York City's booking service data reporting law, which goes into effect in January 2023, intends to prevent platforms like Airbnb from processing transactions unless the registration information matches a city database. It requires online short-term rental platforms to periodically provide OSE with information about transactions for certain listings. These reports include the physical address of the short-term rental (as reported to the booking service by the host), the URL of the short-term rental listing, details pertaining to the scope of the short-term rental transaction, and information relating to the identity of the host, including contact information and associated bank accounts to which payouts were made.