Owner Fined $53,100 for Tenants’ Illegal Airbnb Use

In a recent decision, the Appellate Division found that owners cannot claim ignorance if inspectors find that tenants used online sites to rent out their units for short-term stays. The court affirmed fines for the illegal conversion of residential units into hotel rooms.

On June 5, 2015, the owner in this case sent three tenants a letter advising them that their leases would be terminated and they would be evicted if they continued illegally renting out their apartments for hotel use. On July 6, 2015, the Department of Buildings conducted an inspection after receiving a complaint. The owner received four Notices of Violations for the apartments being used for short-term transient use and failure to provide a fire alarm system and automatic sprinklers for the transient use.

Soon after, the tenants were served notices of termination, which indicated their leases were terminated as of Aug. 8, 2015. The tenants vacated their respective apartments on July 31, 2015, Aug. 8, 2015, and Aug. 14, 2015.

At the administrative hearing the owners argued they had no prior knowledge that tenants were renting their units as hotel rooms. The owners also argued that since only three tenants out of the 264 rent-stabilized units were in violation, the building wouldn’t qualify as a hotel, and thus wouldn’t trigger the hotel fire-alarm and sprinkler requirements. The city responded to the owners’ argument by stating that any transient use in the building requires full compliance with applicable fire-alarm and sprinkler requirements, and the owners are legally responsible for their tenants’ illegal use of the premises.

At the hearing, counsel for DOB provided evidence from cell phone photos that showed website advertisements for hotel rooms in the building, as well as text messages between an apartment lessee and a third party arranging to meet at a nearby restaurant so that the third party could “check in.” Copies of previous violations from the building were also provided. Additionally, DOB noted that the owners were aware of the offenses prior to the current violations.

The Environmental Control Board found that lack of knowledge was not a defense, and the owners had a responsibility to maintain the premises and to be up to code. The owners received $53,100 in fines for the illegal conversion of permanent residential units to transient use as hotel rooms by three tenants in the 264 rent-stabilized unit building violating Administrative, Construction, and Building Codes. The Appellate Division sustained the violations and found that the offenses were not shockingly disproportionate to the offenses due to the history of violations. The Appellate Division found the charges were “supported by substantial evidence” and the owner’s arguments to be “unavailing.”

• 42/9 Residential LLC v. New York City Envtl. Control Bd., 2018 NY Slip Op 07052 (App. Div. 2018).