NYC settles two Airbnb lawsuits against owners for $ 1.2 million

Brian Chesky, CEO of Airbnb, 536 East 14th Street, Mayor Bill de Blasio and 412 West 49th Street (Getty, Google Maps)

The owners Rose King and Maxine Gilbert do not know each other, but according to their lawyers, they have one thing in common: the ignorance of illegal Airbnb rentals in their buildings.

King was arranging the rentals, but claims she didn’t know they were illegal. Gilbert said she had no idea the rentals were in progress at all.

City officials doubt these claims, but point out the gist: The city gets six-figure settlements in each case.

The Blasio administration sued King in 2017 and Gilbert related entities in 2018 and is to receive $ 516,203 and $ 700,000, respectively. This is the city’s latest gavel strike in a laborious Whac-a-Mole game against entire house rentals under 30 days, which are prohibited by state law.

The city and affordable housing advocates argue that illegal rentals are removing crucial units from the city’s already meager housing supply, raising costs for renters and competing with legitimate hotels.

The Office of Special Enforcement has sued King and his affiliates for allegedly advertising and operating short-term rentals through Airbnb at three buildings in East Village. And he sued the entities that own seven Gilbert buildings in Hell’s Kitchen and their property manager, Big Apple Management, for failing to terminate those tenancies.

Although the short-term rental of apartments designated for permanent residence has been prohibited under the State Multiple Housing Act since 2010, the city has struggled to reduce them. But lawsuits build case law against various ploys, laying a legal basis for future cases, regardless of what method people use to try to beat the system.

Maxine Gilbert’s attorney, Adam Leitman Bailey, said Gilbert was paying the settlement with the city even though it was unaware the tenants were operating an Airbnb business at his properties.

“These are professional operators who did this all over town and performed these gambits without my client’s knowledge,” said Leitman Bailey.

City officials said she could have figured it out.

“Landlords have an obligation to ensure buildings are operated legally, and the lawsuit was only brought after landlords and their management company received several rounds of violations for authorizing rentals,” said Christian Klossner, executive director of the Office of Special Enforcement. , in a report.

King, for her part, was actively renting units in her apartment building through Airbnb, but her attorneys, Todd Spodek and Jeremy Feigenbaum, said she was unaware she was breaking the law. In court transcripts, King said she believed it was legal because Airbnb never stopped her.

But King had made a deal with a man named Bryan Chan, who created 34 different host accounts in an apparent strategy to evade Airbnb’s policy of not allowing users to list multiple addresses. The settlement payment of $ 516,203 is for all income from illegal rentals.

His lawyer blamed the tech platform.

“The reality is that Airbnb is profiting as individual owners are forced into protracted litigation with the city,” Spodek and Feigenbaum said in a statement. “Airbnb continues to shirk its responsibilities and impose legal costs on its hosts. “

Airbnb website includes information about a host city’s laws, but does not prevent hosts from posting ads that violate them. Federal law protects technology companies from liability for these and other actions that customers take on their platforms.

As of last year, Airbnb has been required to share short-term rental listing information with the city, which includes address and nights booked. Airbnb did not respond to requests for comment.

Both lawsuits involved hosts who used fake identities to list Airbnb rentals, but Airbnb recently updated its identity verification program. The company says that 97.9% of its bookings in the United States are between a host and a guest who have completed the identity verification process.

Yet rentals of less than 30 days in the absence of the owner or tenant still occur regularly, city officials acknowledge, often to the dismay of owners. Last month, the Brodsky organization sued a tenant who allegedly rented an apartment on Airbnb using a false identity.

Not all short-term rental violations end in litigation with the city. Some only result in fines.

“Most of our lawsuits come after at least two rounds of inspections have determined that not only are they breaking the law but that they are not stopping once told to do so,” he said. Klossner said.

King’s properties were strewn with infractions and she paid more than $ 113,000 in administrative penalties before the litigation and owes the city $ 80,000, according to the Office of Special Enforcement.

Likewise, Gilbert paid over $ 46,000 in administrative penalties prior to the litigation and owes the city over $ 300,000.

The city is still suing two tenants who operated a short-term rental business in two of the buildings in Gilbert’s Hell’s Kitchen.

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