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Local Law 18: The End to Vacation Rentals in NYC or Much Needed Legislation to Combat Illegal Short-Term Rentals and the Housing Crisis?

Local Law 18:  The End to Vacation Rentals in NYC or Much Needed Legislation  to Combat Illegal Short-Term Rentals and the Housing Crisis?

Early last month, phase one of New York City’s much talked about Local Law 18 went into effect. Intended to put an end to illegal short-term rentals, protect the safety of travelers, and ease the tight housing market , this new regulation requires short-term rental hosts to meet certain conditions and officially register their properties with the City. It has been hotly debated amongst property owners, travelers and rental platforms since its adoption in January 2022.

Local Law 18 puts strict new guidelines in place for short-term (less than 30 consecutive day) rentals, which some believe will effectively eliminate all but a handful of vacation rental properties in the five boroughs. Would-be hosts and booking platforms face fines for violating the new rules. It does not apply to class B multiple dwellings – properties which are occupied transiently as a rule – such as hotels, dormitories, and other more traditional vacation accommodations. Local Law 18, also known as the Short-Term Rental Registration Law, requires short-term rental hosts in class A dwellings to register their properties with the Mayor’s Office of Special Enforcement (“OSE”) and prohibits booking platforms from processing transactions for properties that are not registered. To qualify for registration, the host must be a natural person who permanently resides in and is either the owner or lawful tenant of the proposed short-term rental property.

Local Law 18 also allows building owners, including coop and condo boards, to add their properties to a Prohibited Buildings List maintained by the OSE. Once a building is added to the Prohibited Buildings List, OSE is required to deny any registration requests submitted by would-be short-term rental hosts in the building. To qualify for inclusion on the Prohibited Buildings List, short-term rentals in the building must be prohibited either by law, such as the case of an entirely rent-regulated building, or by the leases and/or occupancy agreements for all units in the building.

Whether these new regulations will amount to an effective ban on short-term vacation rentals in New York City as some fear remains to be seen, but booking platforms clearly view Local Law 18 as a significant threat to their businesses. Over the summer, Airbnb, Inc. commenced a legal action in an effort to block the new law from going into effect. Arguing that OSE’s enforcement of Local Law 18 would impose massive unreasonable burdens on hosts and booking platforms, it dubbed the new rules the City’s “most extreme and oppressive regulatory scheme yet, which operates as a de facto ban against short-term rentals in New York City.” Unfortunately for the booking platform, its efforts to stop Local Law 18 from going into effect proved futile when the court dismissed its lawsuit, explaining that “it was ‘inherently rational’ for the city to require that hosts register with a local agency, as a means to reduce the thousands of illegal short-term rental listings.”

With the newly promulgated rules in effect, Airbnb now finds itself on the other side of a pair of lawsuits with two landlords alleging their tenants and Airbnb violated Local Law 18. In Columbus 69th LLC v. Dominguez, et al. , the landlord alleges that its tenant, whose lease was terminated earlier this year, “egregiously continues renting the Premises to short-term occupants vis-à-vis Airbnb . . . in violation of the now-expired Lease” and in violation of the building’s inclusion on the Prohibited Buildings List. It further alleges that Airbnb is in violation of Local Law 18 by allowing the tenant to continue renting the Premises through its site. The allegations are similar in S&P Associates of New York LLC v. Dewald, et al. Temporary restraining orders have been granted by the judges in each case, ordering Airbnb and the tenants to stop listing the units. The lawsuits – the first of their kind to seek enforcement of the new laws – are in their early stages, stay tuned into the Ingram Newsroom to follow along as they unfold.

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