Litigating Against the New Transient Use Statute: The First Trials

By Christopher Halligan

As Environmental Control Board litigators, we know that every day is a new battle and we can never predict the result of a case, no matter how good the facts may be. And then of course, there’s the old saying that no one beats City Hall.

Well, for us, we had to go higher and beat the State government. The State of New York passed an amendment to the Multiple Dwelling Law in 2010, effective May 1, 2011, that defined permanent residency for Class A apartments as: a natural person or family living in a unit for a minimum of 30 consecutive days. The purpose of this amendment was to protect the rights of permanent occupants from the transient use of a building, to preserve affordable permanent housing, and to protect hotels from unfair competition.

The law states no Class A apartment may be leased to a person for less than 30 consecutive days. It is also important to note that there are exceptions to this rule. One such exception is that a permanent resident is allowed to have guests for less than 30 days provided there is no exchange of money for the stay.

The government claimed that an entire building may be in breach of the new amendment, warranting the issuance of numerous violations requiring compliance with hotel standards under the Building Code and Zoning Resolution, merely because one unit is allegedly being used as a transient occupancy. The Mayor’s Task Force, armed with this amendment, commenced an intense investigation to seek out alleged illegal occupancy in buildings all over New York. The government, via the Department of Buildings, has been sending out it’s inspectors, along with police officers and fire department officials, to investigate any claim of alleged illegal use. These claims can be called in to 311 and once called in, building owners can expect to be issued a slew of violations not just for illegal occupancy including failure to comply with the Building Code and Zoning Resolution requirements for a transient hotel but also for any work without a permit violations that may be visible to the inspector.

Several of our landlord clients had been served. Each client was issued violations ranging from 6-13 per building, all stemming from the alleged illegal occupancy usually of one unit. Our landlord clients were looking at potential violations accumulating approximately $10,000.00-$20,000.00 per building in penalties arising from the alleged illegal occupancy. There is no mitigated penalty on the illegal occupancy violation.

We knew to come prepared for battle and thus we began our attack one violation at a time. Our first layer of defense was procedural. We requested not just affidavits of service but also affidavits of mailing. We closely scrutinized each violation for any kind of error, whether it be the name of the landlord, the address, if service was proper, were all the dates legible, were the correct sections of Building Code cited to, etc.

Once we noted every technicality we could find, we began our second layer of defense, attack the substance. Armed with knowledge of the law, we argued that under the Building Code, section 28-118.3.2, it is unlawful to make a “change…to a building” that is inconsistent with its certificate of occupancy. We argued that no physical changes had been made to our landlord clients’ buildings. We argued that the our buildings lacked the Zoning Resolution’s requirements for a transient hotel to provide “one or more common entrances…twenty-four hour desk service…housekeeping, telephone, or bellhop service, or the furnishing or laundering of linens.” See Article 1, Chapter 2, section 12-10 of the Zoning Resolution. Because our client’s have not performed these physical changes, we argued that the violations are not only inapplicable, but also that the violations never should have been issued and require changes contrary to the Certificate of Occupancy on the building.

The Judges agreed with these arguments and subsequently dismissed 24 out of 26 violations for our clients.

Christopher Halligan represented Adam Leitman Bailey, P.C. at the trial in front of the Environmental Control Board.

Adam Leitman Bailey, P.C.