AirBnB listing in NYC hit with $1 million fine

The two-story brick house in Flushing, New York, is a million-dollar home, but perhaps not in the way the owner intended.

Off Main Street in a residential neighborhood in Queens, not far from a car wash, a pharmacy and a T-Mobile store, the house has old newspapers on the door that partially hide a yellowing notice from New York City’s Department of Buildings and a sign warning that security cameras are watching.

According to public records, the house was being used illegally Airbnb the rental properties and people live in the attic and basement. It has been on the city’s radar for years, accumulating violations, complaints from neighbors and an order to vacate a portion of the home that was illegally occupied, city filings show. In 2021 alone, homeowners incurred $984,000 in default penalties, none of which were paid, a Bloomberg calculation based on city records showed. The same filings show it racked up more fines than almost any other illegal Airbnb property in 2021, the most recent year of data available, by a large margin, which accounting for about 11% of all fines issued throughout the year.

But it is far from alone. New York has more than 29,000 short-term rentals, and nearly a third of those are listed illegally, according to Mayor Eric Adams’ Office of Special Enforcement, which is tasked with regulating the rental industry. short term rental. With some of the strictest regulations in the country, New York essentially prohibits the rental of most apartments for less than 30 days without a gift from the tenant.

The city has done some high profile shakedowns on illegal Airbnb empire and issued $8.9 million in fines by 2021. But records show that only a fraction of hosts are willing to pay. In fact, the filings show that many are subject to sanctions. A property near the Port Authority of Manhattan, which is owned by ORJ Properties, has accumulated about $170,000 in fines in 2021, according to a Bloomberg calculation of records. ORJ Properties, which had some of the sanctions dismissed, did not respond to phone and email requests for comment. A man at the Flushing home waved off a reporter who showed up at the door and declined to comment.

New York disputes Airbnb Inc. over the years due to the proliferation of illegal listings and expended significant resources to pursue violators. New rules taking effect at with designed to prevent properties like the one in Queens from hitting the market in the first place. Hosts who want to list on Airbnb or other platforms must register with the city and receive an operating license. Companies cannot collect booking fees for unregistered properties, so this should help reduce pressure on the city to track down illegal listings. Units with uncorrected fire-code violations or vacating orders may not be eligible for registration.

The new rules are the culmination of a year-long legal battle between Airbnb and New York, one of the company’s largest domestic markets. The city blames Airbnb for driving up the already high cost of living in some neighborhoods, listing unsafe accommodations and taking much-needed rental space off the market for locals.

The measures to be implemented this spring will put more teeth into existing laws and introduce new rules. Hosts must show a diagram with all exit routes from the unit and show the registration certificate, submit proof that the host is a permanent resident and list the number of unrelated permanent residents. living in residence. Hosts can face penalties of up to $5,000 for repeat violations.

The tightened policies have led to heated objections from hosts who worry about a huge loss of income if they can no longer rent 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 in the city at a time when many families are trying to keep up with the rising cost of living,” said Nathan Rotman, the public policy leader at Airbnb region. “The rules as currently written will prevent many New Yorkers from listing their homes, and we urge the administration to work with our host community to support a regulatory framework that helps responsible Hosts and target illegal hotel operators.”

After a series of public hearings, the city made the rules more flexible by doubling the length of the registration term to four years, expanding the required identification documents and consent to not will require submission of a full lease during the application process, among other changes.

Until a the case has been settled in 2020 where Airbnb has agreed to hand over the personal data of its hosts, officials are often forced to remove illegal listings through old-school sleuthing, like looking at photos online. And fines and penalties seem to have little effect on some property owners determined to break the rules. Nearly 75% of all violations issued by the Office of Special Enforcement in 2021 were due to the city’s failure to file paperwork showing past violations, such as not having proper safety nets. fire, fixed.

Licensing short-term rentals “has been on the city’s radar for more than 10 years,” said Kathleen McGee, a partner at the law firm Lowenstein Sandler and former director of the Office of Special Enforcement. under the Bloomberg administration. “It’s an administrative burden on the city for entities that don’t pay the fines.”

In 2019, the Office of Special Enforcement collected 21% of all fines imposed, but this fell in 2020 as the pandemic ravaged New York City. That year, officials levied $7.4 million in fines but recovered more than $400,000 in payments as of August 2021. City reports provide only a snapshot of collection efforts at a given time and to can sell a house or refinance a mortgage, the fines should be removed, prompting officials to believe that they will eventually be paid. The city saw the Queens home and the ORJ Properties building as outliers.

After eight years, the time for the city to collect the debts ends. But that doesn’t mean violators are off the hook.

“If you’re going to be a legitimate going concern you can’t do it,” says Chris Slowik, a real estate attorney and partner at Klein Slowik PLLC.

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