NYC Sues Airbnb Over Ignored Subpoena

The New York State Multiple Dwelling Law (MDL) established the standards for all buildings containing three or more dwelling units. The MDL flatly prohibits unhosted rentals of less than 30 days in “Class A” multiple dwellings. These are buildings occupied by three or more families living independently. In 2010, the MDL was amended to provide that Class A multiple dwellings can be used only for “permanent resident purposes.” This means that these dwelling units must be occupied for at least 30 or more consecutive days by the same person or family [MDL, Article 1, Sections 4-7, 4-8]. Thus, one cannot rent out an apartment in a “Class A” multiple dwelling for less than 30 days, unless a “permanent resident” is present during the rental period. Such a permanent resident must be a “natural person.” In other words, the natural person is a human being. This requirement eliminates corporate hosts.

The MDL is enforced in New York City by the Mayor’s Office of Special Enforcement (OSE). Attorneys for NYC recently filed a lawsuit against Airbnb after the company refused to acquiesce to a subpoena for short-term rental records for an apartment building in Manhattan. The OSE was already seeking $1 million in damages from the building’s owner and an associate for leasing apartments for less than the 30-day minimum required by New York laws.

The office subpoenaed Airbnb for records related to those rentals in January, but Airbnb officially declined to cooperate with the subpoena the following month, citing the Stored Communications Act. The OSE is calling on the court to force Airbnb to comply with the records requests plus pay penalties and costs. According to Airbnb, it was concerned about the specific scope of the subpoena and believed it had already provided material to the city.

In addition to the passage of the MDL, New York City enacted a law in October 2016 that makes it illegal to advertise a short-term rental that’s prohibited by the MDL. This includes listing such rentals on Airbnb and other online short-term rental platforms. Fines for violations range from $1,000 for the first violation, to $5,000 for the second, to $7,500 for three or more violations [N.Y.C. Admin. Code Sec. 27.287.1]. According to the law, such fines can be levied both on individual hosts and on Airbnb or another rental platform. At the time, Airbnb sued to stop implementation of this law, claiming that it violates the free speech guarantee of the First Amendment. Then, in December 2016, Airbnb settled and agreed to drop the lawsuit as long as New York City enforces the new law only against hosts and does not fine Airbnb.