Mayor’s Office of Special Enforcement Files Lawsuit Against Illegal Short-Term Rental Transaction

The lawsuit alleges the landlord conducted approximately $2 million in illegal transactions for short-term rentals over a four-year period. On Monday, July 12, Mayor Eric Adams and Executive Director of the Mayor’s Office of Special Enforcement (OSE) Christian J. Klossner held a press conference to announce legal action against an illegal rental operation in short term in the Turtle Bay neighborhood of Manhattan. Administration officials were joined by Hotel Trades Council Chairman Rich Maroko, Council Members Keith Powers and Gail Brewer, Assemblyman Richard Gottfried and members of the Anti-Hotel Coalition illegal.

This is the first lawsuit filed using evidence obtained under the Reservation Services Data Reporting Act. The law was passed in 2018 and requires all “online, computer or app-based” platforms[s]that instruct individuals or businesses offering housing rentals to provide the Office of Special Measures with information on rental transactions of less than 30 days for all listings that have five or more nights rented per quarter. For each of these transactions where fees were accepted, platforms are required to declare the rental address, including the apartment number, the name and address of the person offering the unit for rent, and information about the listing used to rent the unit.

In this case, data provided by Airbnb led investigators to identify Arron Latimer, a licensed real estate broker, as running an illegal short-term rental operation at 344 East 51.^st street. The building, which includes eight apartments, is designated class A under the City Multiple Dwellings Act. Class A buildings are specifically for permanent residence, as codified in a 2010 amendment to the law. The charge is that Latimer and his associates used the apartments for short-term rentals, in violation of the building’s Class A status. The lawsuit also accuses Esther Yip, who owned the building through an LLC called Apex East Management, and the LLC itself, of being involved in the operation.

The City concluded that Latimer made approximately $2 million in illegal transactions over four years, including nearly $1 million from units at 51^st street building. During this period, Latimer reportedly used at least 27 different host accounts and more than 78 different ads in six different buildings.

Although short-term rentals may be legal, they are heavily regulated at the city and state level to prevent the loss of the city’s already scarce housing stock.

The city also alleges that Latimer defrauded and endangered its customers, citing the use of stock photographs in the listings, guest reviews who said unit addresses were different from those listed and multiple complaints of unsanitary conditions including dirty laundry, mold. , and blood. The 51^st The building on the street had been cited several times for violating short-term rental regulations and safety codes. Assemblyman Richard Gottfried, who represents parts of mid and western Manhattan and was one of the sponsors of a 2010 law targeting illegal hotels in residential buildings, spoke about security concerns created by large numbers of passing guests having access to building keys, and the difference in building codes for apartment buildings and hotels.

“Secure, stable and affordable housing is fundamental to a thriving city, so we will not allow bad actors to deplete our housing stock and undermine our hospitality industry,” Mayor Adams said.

Director Klossner said, “This lawsuit underscores the need for robust reporting requirements for booking platforms, and why the city needs the short-term rental registration program that will take effect in 2023.”

The Short-Term Rentals Registration Act, which came into force in December last year, will require those looking to offer short-term rentals to register those rentals with the OSE. The OSE will then issue special registration numbers for each unit. Reservations services will then be responsible for verifying registration numbers against a city database. The law is expected to come into force in January 2023.

By: Christophe Kipiniak (Christopher is an intern at CityLaw and a student at New York Law School, Class of 2024.)

OSE: “Mayor Adams Announces Special Office of Law Enforcement Legal Action Against Illegal Short-Term Rental Operation” (July 12, 2022).