Airbnb Lawsuit to Block NYC Rental Rules Dismissed

A state Supreme Court judge has tossed out Airbnb’s lawsuit seeking an injunction to block New York City’s registration rules for short-term rentals.

Local Law 18, passed in January 2022, requires Airbnb hosts to register with a database overseen by the Mayor’s Office of Special Enforcement, submit diagrams of their homes and a list of who resides there, and prove they are abiding by zoning and safety regulations.

City officials said the law is aimed at landlords the city claims have been illegally collecting Airbnb booking fees for their properties. Officials estimate that nearly 10,000 short-term rentals in NYC are listed illegally.

The law imposes penalties of up to $5,000. Airbnb is required to certify that all of the information provided by its hosts to NYC is accurate or be subject to fines of up to $1,500 per violation.

In a lawsuit filed in June, Airbnb said the requirements amounted to a “de facto ban” of the home-sharing platform in NYC “by requiring extensive and intrusive disclosures of personal information and forcing open-ended agreement to labyrinthine regulations scattered across a complex web of laws, codes, and regulations.”

State Supreme Court Justice Arlene Bluth dismissed the complaint on Tuesday. In her ruling, the judge acknowledged that Airbnb will have to take down many of its listings based on the new rules but said NYC had provided the home-sharing giant with “a very simple way” to properly verify listings.

The judge chastised the home-sharing giant for “making little or no effort” to make sure its NYC hosts registered with the city.

“Airbnb has known about these rules for many months and has had ample opportunity to tell its hosts about these new rules and tell them to apply for a registration number,” Bluth said, in the ruling.

“Airbnb cannot make little or no effort to tell its hosts to register and then complain that it might have to take down hundreds or thousands of listings because they are not registered,” the judge said.

In a statement, Airbnb called NYC’s registration requirements “a blow to its tourism economy and small businesses in the outer boroughs who rely on home sharing and tourism dollars to help make ends meet.”

The city said the new rules are needed to shut down widespread illegal rental activity that has been using fake Host profiles on Airbnb and other sharing platforms to market “substandard” short-term housing.

The registration requirements were enacted in the wake of a lawsuit filed by OSE to shut down what it called an illegal short-term rental operation being run by a licensed real estate broker in Turtle Bay.

The lawsuit was announced by Mayor Eric Adams, who said that “bad actors” have for several years “used fake host profiles on popular sites like Airbnb to deceive and lure unsuspecting guests into paying for substandard lodging at illegal rental listings.”

“Not only did they unlawfully pocket millions, but they endangered guests and deprived New Yorkers of an entire building’s worth of long-term housing,” Adams said.

“We are sending a clear message that this kind of lawlessness will not be tolerated in our city. We are not going to stand by while shady brokers use illegal listings and fake host accounts to skirt the law and defraud consumers,” the mayor said.

Rosenberg & Estis attorney Adam Lindenbaum called Bluth’s ruling “well-reasoned and likely to be upheld if appealed.”

However, he told GlobeSt., enforcement procedures could pile another burden onto already stressed property owners.

“The Office of Special Enforcement seems to be taking the position that it is authorized to fine landlords even when they have done everything they can to ban illegal short-term rentals and comply with the law, and when tenants have willfully circumvented legal requirements and landlord efforts to keep short-term rentals out of their property,” Lindenbaum said.

“This places another unfair financial burden on owners who have not caused the offence and, indeed, who have done everything to try to prevent it,” he said.

Lindenbaum said the Court left the door open to future challenges to Local Law 18.

“The judge noted that a lot of owner complaints were premature and there may be future challenges based on how the OSE processes and reacts to applications for short-term rental registration,” he said.