In this week’s article we return to the ongoing battle between Airbnb hosts and their landlords in New York City regarding the rental of their apartments to Airbnb guests.
Travel Law Update
Maternity Tourism
In Francis, Alleged ‘Maternity Tourism’ Rings in California Are Target of Federal Raids, abcnews.com (3/3/2015) it was noted that “Federal agents and local police raided dozens of apartments in about 20 luxury buildings…in what may have been the biggest crackdown yet on three so-called ‘maternity tourism’ rings…A court affidavit today claimed the website You Win USA Vacation Resort was used to specifically attract pregnant Chinese women. Authorities said the women paid $15,000 to $50,000 for housing, food and transportation to medical services as well as visas allowing them to stay in the US legally. ‘People who come from China to the United States for the sole purpose of having their children born as American citizens’ said Claude Arnold of ICE and Homeland Security in Los Angeles…The alleged ringleaders are accused of pocketing hundreds of thousands of dollars and could face criminal tax fraud, money laundering and conspiracy charges”.
Senior Nomads & Airbnb
As noted in Kurutz, A Grand Tour With 46 Oases, Retirement Plan: An Airbnb Travel Adventure, nytimes.com (2/25/2015) “What does it take to be a Senior Nomad?…So the sailboat on which the couple had spent so many weekends-sold. Ms. Campbell’s little Volkswagen convertible-someone else’s dream ride now. Their townhouse-occupied by renters. Everything else stashed in a 12-by-15 foot storage unit. The Campbells have spent the past year and a half crisscrossing Europe living for a week or more in one rental home before moving on to another. They’ve stayed in a grand formal apartment in Florence, a graphic designer’s… place in Paris and a farmhouse in Wexford, Ireland. Their home in Luxembourg had beautiful exposed beams and a loft; their apartment in Tallinn, Estonia, has a sauna. And when they arrived in Rome, they found themselves in the unusual position of not knowing which street door their home was behind. ‘We’re not on vacation’ Mr. Campbell said. ‘We’re not retiring in the traditional sense. We’re out seeing the world in Airbnb apartments because that’s how we can afford to do it’”.
Earlier Airbnb Host Cases
Previously in Dickerson, Travel Law: Airbnb Update: The Case Of The Rent Controlled Tenant (www.eturbonews.com (1/22/2015) we discussed the case of Brookford v. Penratt, 2014 WL 7201736 (N.Y. Sup. 2014) wherein the Court held that “Defendant (tenant)…resides in a four bedroom, rent controlled duplex apartment on Central Park West…Over the past two years, defendant has had 135 short-term rentals, some as short as three nights, but none exceeding 21 days, facilitated by the use of the website Airbnb…Therefore, plaintiff (landlord) has sufficiently demonstrated, at this juncture, that defendant’s (tenant’s) 135 rentals to transients for the past year and a half for more than the regulated rent, constitutes an incurable violation of the Rent Control Law…Preliminary injunction (granted) enjoining defendant from advertising and renting the apartment to tourists…for stays of less than 30 days, operating an illegal hotel and/or bed and breakfast out of the apartment…”.
The Ikezi Case
In 42nd And 10th Associates LLC (petitioner/landlord) v. Ikezi (respondents/tenants), Index No. 85726/ 2014, N.Y.C. Civil Court (J. Stoller)(Decision 2/17/2015) the Court noted that the “petitioner…commenced this holdover proceeding against…the respondent…seeking possession of…Apt. 46B…on the ground that respondent was using the subject premises, which is subject to the Rent Stabilization Law, for hotel purposes and profiteering…The Court held a trial of this matter on January 16, 2015 and January 21, 2015″.
The Ad & The Rent
“At trial, petitioner proved…that there is a landlord/tenant relationship between the parties pursuant to a lease…with a monthly rent of $6,670.00…The “petitioner’s employee testified that she found an advertisement…placed with Airbnb…touting appealing features of the subject premises…the charge for the room is $649.00 (per day); that there is a check-in time of 4:00 pm and a check-out time of 11:00am; that there is a charge of $95.00 per extra guest; and that there is a $150.00 cleaning fee…Petitioner’s employee testified that the legal regulated rent for the subject premises exceeds $9,000.00 a month, and that respondent is charged a preferential rent ($6,670.00) pursuant to 9 N.Y.C.R.R. 2521.2(a)”
Profiteering?
After hearing testimony the Court noted that “at the very least the record shows that respondent’s employees…placed the subject premises on Airbnb and rented the subject premises out as if it was a hotel room. What remains for the Court to determine is whether respondent profiteered from this activity. As the monthly rent for the subject premises is $6,670.00, the daily rate for the subject premises is $219.29. Even assuming arguendo that the operative figure was the legal regulated rent of $9,347.66 the daily rate would be $307.32. The ad sought a nightly rate of $649.00 for the use of the subject premises as a hotel room…the Court finds that respondent engaged in profiteering, either by renting out the subject premises himself on Airbnb or by causing his employees to rent out the subject premises on Airbnb, that respondent’s relentlessly evasive answers on his direct testimony on petitioner’s case constituted an attempt to withhold this information”.
Grounds For Eviction
“Using a residential apartment as a hotel room and profiteering off of it is ground for eviction and is incurable as it undermines a purpose of the Rent Stabilization Code…As respondent’s infraction is incurable, Petitioner was not required to serve Respondent a notice to cure…the Court awards a final judgment of possession against respondent”.
“Genteel Locals”
In a case not involving Airbnb, City of New York v. Smart Apartments LLC, 39 Misc. 3d 221 (N.Y. Sup. 2013), New York City sought to enjoin the operation of an apartment sharing website claiming that defendant’s placement of tourists in residential apartments for ‘transient’ stays of less than 30 days is illegal because they violate [Multiple Dwelling Laws, Housing Maintenance Codes, City Building Codes] and ‘they bother non-transient residents of the buildings because the transient occupants host loud, late night parties; vomit, dump garbage and smoke in the hallways and generally do not conduct themselves in the civilized genteel manner of the locals’. In granting a preliminary injunction the Court noted that ‘placing tourists in illegal, dangerous accommodations constitutes irreparable injury especially if here is a tragic fire”.
Conclusion
As the battle rages on in New York City over the Airbnb concept hopefully the interested parties will come to an acceptable arrangement so that landlords and tenants can work together for their mutual benefit and still provide tourists from around the world with inexpensive but quality accommodations.
The author, Justice Dickerson, been writing about Travel Law for 38 years including his annually-updated law books, Travel Law, Law Journal Press (2014), and Litigating International Torts in U.S. Courts, Thomson Reuters WestLaw (2014), and over 300 legal articles.
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