A new City law could spell the end of AirBnB and similar short-term rentals in apartments, eliminating a persistent problem in many co-ops, condominiums and rental buildings.
Local Law 18 of 2022 ( which can be accessed here ) becomes effective on January 9, 2023. The law makes it unlawful to offer a short-term rental of an apartment unless the apartment is formally registered with the Mayor’s Office of Special Enforcement (“OSE”).
Under the new law, an apartment owner or tenant who wishes to register an apartment must certify to OSE that: (i) such short-term occupancy is not prohibited by a lease or other agreement, and (ii) the apartment complies with all applicable legal requirements for short-term occupancy, including construction codes. It would be difficult, if not impossible, for a typical apartment owner or tenant to certify either of the foregoing truthfully.
In addition, there must be no uncorrected violations against the building that could endanger apartment occupants. Rent-regulated apartments are not eligible for registration, and thus cannot be lawfully offered for short-term occupancy.
Crucially, the building housing an apartment that is proposed to be registered must not be on the “Prohibited Buildings List” (“PBL”). The law requires OSE to create and maintain the PBL-—a list of buildings whose owners (including co-op and condo Boards) have notified OSE
that short-term rentals are not permitted. OSE will refuse to register an apartment in a building that is on the PBL, and booking services like AirBnB cannot offer apartments in buildings that are on the PBL. Thus, inclusion of a building on the PBL will effectively bar short-term rentals in that building. In effect, building owners (including co-op and condo Boards) can opt out of the short-term occupancy universe by simply notifying OSE to include the building on the PBL.
OSE is required to notify a building owner of the submission of a registration application for an apartment in its building; that would give the owner the opportunity to exercise available remedies against the apartment applicant. OSE is also obligated to post periodically to publicly-available websites all information regarding registered apartments.
Apartment registrants are required to keep applicable records for seven years. Booking services like AirBnB are required to file monthly information reports with OSE.
The fines for non-compliance with any of the numerous obligations in the new law are hefty, ranging up to $5,000 per violation for apartment owners or tenants, and $1,500 per violation for booking services.
OSE is proposing a set of rules to implement the new law; the proposed rules are still in their public comment phase, with the next public hearing currently scheduled for January 11. The current version of the proposed rules can be accessed here.
Co-op and condo Boards, managing agents, and rental building owners can and should get their buildings included on the PBL as soon as the procedures therefor are finalized, so as to render their buildings ineligible for lawful short-term occupancy, thus removing a hitherto annoying problem from their already-crowded plates.
Please feel free to contact BBG for guidance and advice.