Tenants in rent-stabilized apartments may face serious consequences for renting their stabilized apartments to short-term occupants, and/or from “profiteering” by such rentals, even if they rent just a portion of their units. Recent cases in New York have upheld the evictions of rent-stabilized tenants who have “profiteered” from renting to short-term occupants. A NY Appellate court further held that a tenant in a rent-stabilized apartment who hosted short-term occupants through Airbnb, even while she concurrently resided in the apartment, violated the aforementioned restriction on short-term rentals because the supposed ‘roommates’ were not ‘permanent’ occupants[i]
The court noted that, because rent stabilization laws limit the rent landlords can charge for apartments that are under rent-regulation, tenants who are beneficiaries of such rent limitations cannot in turn “profit” from their rent-regulated lessee status by renting out their apartments to others and thereby earning income at or above market rates by more than their landlord-owners are permitted to collect under the Rent Stabilization Code.[ii] Thus, when tenants in rent-regulated apartments sublease their apartments and/or have otherwise lawful co-occupants who contribute to their rent, the primary tenants cannot charge more than a “proportionate” share of their regulated rent amount to their co-occupants or sub-tenants. The case law indicates that tenants in rent-stabilized apartments who run afoul of the laws governing short-term occupancy and/or restrictions on “profiteering” are at heightened risk of facing eviction.
Advertising Short-Term Rentals on Airbnb or Elsewhere
A new law enacted by the New York legislature and signed by Governor Cuomo in late 2016 expressly prohibits the advertisements, including but not only through such websites and platforms such as Airbnb, of short-term rentals that would violate the short-term occupancy restrictions of the New York Multiple Dwelling Law. This law further provides that any individuals who advertise short-term rentals on Airbnb, and/or otherwise violate the prohibition of advertising such rentals, face civil penalties of up to $1,000 for initial violations. The penalties increase to $7,500 for a third or subsequent violations. While this law took effect over a year ago, the extent and effects of its implementation are still unclear and are being watched. primary New York State law that prohibits short-term occupancy, and in turn the use of Airbnb, is the New York State Multiple Dwelling Law (MDL). The MDL applies to residential buildings with three or more units; it does not apply to single-family or two-family homes.
Section 4 of the MDL expressly permits “incidental and occasional occupancy” for less than 30 consecutive days by persons other than the “permanent occupants” for personal reasons, though “[P]rovided that there is no monetary compensation paid the permanent occupants for such occupancy.” For example, if a tenant goes away on vacation for a week and the tenant’s mother stays in her apartment for that week and the daughter does not take money for the stay. Sublets, Roommates, and ‘Short-Term’ Occupants
The legal issues surrounding Airbnb bring up the distinction between roommates, sublets, and “short-term” or transient occupants.
A sublet, is an individual who leases from the primary tenant, and who acquires exclusive use of the apartment while the primary tenant is absent. A sublet may be either a short-term occupant who stays in an apartment less than 30 days, or may become a resident of an apartment once (s)he occupies the apartment for at least 30 consecutive days.
Sublets who rent for periods of less than 30 consecutive days run afoul of the short-term renting restriction in the MDL discussed above.
In contrast to a sublet, a roommate is someone who resides in an apartment together with the primary tenant, and who does not have exclusive use of an apartment.
Even if an individual rents a room on a temporary basis while the tenant of record is present, the short-term or transient occupant is not a true roommate because (s)he is not a “resident” per the definition of “permanent resident” provided in the MDL if (s)he does not occupy or reside in an apartment for 30 consecutive days or longer. Thus, short-term occupants of Class-A dwellings may still be running afoul of the MDL even if they are staying in an apartment with the primary tenant and do not have exclusive use of the apartment, if they are paying the primary tenant for such occupancy and if they stay in the apartment for less than 30 consecutive days.
The information above is intended to provide limited information only and is not legal advice. The laws relating to apartment sharing, sublets, and/or the use of Airbnb in New York are complex. If you are a party to a matter concerning the use of Airbnb or short-term rentals, or otherwise need further guidance in this or a related area of law, Singh & Rani, LLP can assist you.