January 21, 2016
By Rich Bockmann
The legal gray area that is Airbnb’s operating space in the city is a bit less foggy after a panel of judges shot down an appeal from a Related Companies tenant who was evicted for listing his rent stabilized apartment on the home-sharing website.
The ruling is significant in New York City, where Airbnb is battling a perception as an outlaw company. To boot, New York City has more than 1 million rent-regulated apartments, some of which are listed on the popular home-sharing service.
“This is big as far as evictions for short term rentals go,” said real estate attorney Adam Leitman Bailey. “Before this decision, a tenant or owner could rent out a unit for a weekend and then when he or she received an eviction notice the tenant could stop renting for a month or two until he or she cured and start again. This decision allows for evictions if the owner or shareholder or tenant runs a short term rent[al] business.”
In late December, the appellate court upheld a February decision by Housing Court Judge Jack Stoller to evict Henry Ikezi from his swanky two-bedroom penthouse at Related’s MiMa apartment tower at 450 West 42nd Street in Hell’s Kitchen.
Soon after he moved into the building, Ikezi began listing his apartment on Airbnb for $649 per night, and the trial produced evidence of short-term renters showing up at the building. Izeki was paying $6,670 a month on a stabilized apartment with a market value north of $9,000 prior to the eviction, according to court filings.
Beyond barring hosts from renting entire units for fewer than 30 days, New York state law also prohibits tenants from profiting from stabilized units. And while rent-stabilized landlords have certainly argued that’s just what many Airbnb hosts are doing, thanks to the appeals court ruling, building owners now have case law on their side.
“The integrity of the rent stabilization scheme is obviously undermined if tenants, who themselves are the beneficiaries of regulated rentals, are free to sublease their apartments at market levels and thereby collect the profits which are denied the main landlord,” the panel said in the ruling.
In fact, the appellate judges in their decision quoted from a 1985 case that ruled rent-stabilized tenants could be evicted for subleasing their apartments for a premium.
Airbnb did not respond to a request for comment. A spokesperson for Related said the company has a “zero tolerance policy” when it comes to making sure its residential units comply with the stabilization laws.
The judges also found that Related was not required to give Izeki a chance to rectify the damage before being evicted, as he “charged the subtenants far in excess of the legal rent and commercialized the premises from the inception of his tenancy.”
The majority of the 33,000-plus Airbnb listings in the city, by the company’s own admission, are in violation of the state’s multiple dwelling law.
An analysis by The Real Deal of commercial units listed on the site – those available for rent at least half of the year – showed the effect the home-sharing site has on pushing rents up in popular neighborhoods. A Penn State University study commissioned by hotel interests found that New York metro area hosts with two or more listings accounted for 32 percent of Airbnb revenue in New York City.