Interpreting New York’s Heightened Restrictions on Airbnb and Other Short-Term Rentals

Although New York City already prohibits leases fewer than 30 days in multiple-dwelling buildings, on Oct. 21, 2016, the state legislature piled on significant fines for those who advertise any listing that disregards the law.

Wurtzel-Dan_800x620New York State just cracked down further on condominium owners, cooperative shareholders and residents who list their homes for short-term rentals on services such as Airbnb, HomeAway and others. Although New York City already prohibits leases fewer than 30 days in multiple-dwelling buildings, on Oct. 21, 2016, the state legislature piled on significant fines for those who advertise any listing that disregards the law. Owners and renters now face fines that range from $1,000 up to $7,500.

Despite the increase in fines, short-term rentals will most likely remain popular. That’s because they can be a win-win for both travelers and unit owners—short-term occupants can enjoy unique vacation experiences and save on lodging, while owners can monetize their living spaces and earn extra cash. Interest and demand are especially high in destinations with pricey hotel rates such as New York. Collectively, Airbnb hosts in New York brought home more than $1 billion in 2015.

That said, managers of multifamily buildings both in New York and across the country, should take advantage of the new legislation to educate boards about short-term lease restrictions, and how to mitigate overall risks that short term rentals can pose to multifamily properties.

Here’s a quick checklist for boards to review:

Confirm building’s governing documents and rules related to short-term rentals are understandable.

It is critical that a building’s by-laws, and how they address apartment leasing, are easy to interpret. If the language regarding length terms is unclear or not specifically addressed, consult with your association attorney before making changes. Clear communication can reduce the ability for owners or residents to claim ignorance about the laws and building policies after the fact, and any backlash if applicable fines are levied against a tenant or owner who is found in violation. In fact, Airbnb itself is very strict with hosts that don’t do their due diligence to understand the rules of their building before offering up accommodations. Not only can their host ranking be severely penalized, they can be hit with cancellation fees and even removed from the site entirely. Recently, after a condo board in New York sent an Airbnb host a notification to stop short-term rentals in his unit, which resulted in a last minute cancellation, other hosts unleashed a fury of criticism on the Airbnb community billboard. One host posted, “You reflect on us all….potential guests won’t trust Airbnb!”

Ensure unauthorized guests don’t gain entry and update procedures to document and track short-term occupants.

Instruct the front-desk team and all other staff to forbid strangers or unauthorized guests to enter the building unless the owner is present or written authorization is obtained from the managing agent.

While a crucial role of your front desk staff is to track all building visitors, it is especially critical that they compile detailed information on short-term renters—this can serve as prima facie evidence if legal action is taken against the unit owner or shareholder. Some property management companies utilize management software for this purpose.

Consider enhanced training for staff and communications to ensure short-term renters understand the building’s safety procedures, services, amenities and shared spaces.

This training should not only cover policies for tracking and dealing with suspicious or unauthorized guests, but also the nuances of providing management services for short-term renters. While their stay may be fully compliant with the law and building rules, many short-term renters have more of an “I’m on vacation” attitude and may treat a property like a hotel. In one famous example, short-term renters came down to a building’s front desk asking for towels, in yet another they tried to order food from a building concierge.

All residents and renters should also have access to information about the building’s rules and regulations as it relates to amenities and shared spaces. As the examples above illustrate, when short-term renters aren’t familiar with the building’s offerings it can impact the ambiance of property for all residents.

More importantly, in states where it is permissible, boards should ensure that all apartments being utilized as a short-term rental are following building safety requirements, such as installation of window guards if there will be children under 10 years-old inhabiting the residence, and the safest course of action to exit the building in the event of a fire are properly displayed behind the door. Apartments should also be checked for partitions or added walls that are in violation of fire-safety rules. In most cases it’s the building owner(s) that would be held liable in the event of an injury, so having proper education and oversight in this area is key.

Although changes in regulation may continue to arise, short-term rentals are likely to remain a reality here in New York and across the globe. Well-positioned boards will develop best practices and strong policies that address the many issues, especially as the burgeoning home sharing service industry continues to evolve. Property managers and boards also need to stay tuned as lawsuits filed by Airbnb against legislation in New York, San Francisco and other popular destinations work their way through the courts in the near future and potentially change rules for short-term rentals yet again.

Dan Wurtzel is president of FirstService Residential New York. In this role, he oversees the departments and teams that manage condominium, cooperative and rental properties throughout New York City. Wurtzel is responsible for client retention, leadership development, organizational growth and strategic initiatives. Under his leadership, the company’s associates are provided the tools and technology necessary to successfully navigate the complex financial, regulatory, and operational challenges they face daily. Wurtzel is also a board member of the Realty Advisory Board on Labor Relations, holds a Registered in Apartment Management (RAM) credential from the National Associated Builders and Owners and is a licensed real estate salesperson in New York State.

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