Airbnb in New York City: The host with the most lawsuits

This week we take another look at the escalating legal combat between Airbnb hosts and real estate interests including landlords and co-op boards.

Airbnb in New York City: The host with the most lawsuits

This week we take another look at the escalating legal combat between Airbnb hosts and real estate interests including landlords and co-op boards. As Airbnb grows in popularity so does the resolve of Airbnb opponents, especially, in New York City. In addition to our previous articles about Airbnb host lawsuits [see Apartment and Car Sharing: A Disruptive Internet Revolution, newyorklawjournal (8/12/2014); Airbnb update: The Case of the rent controlled tenant, www.eturbonews.com (1/22/2015); and When is the rental of an apartment by an Airbnb host “profiteering”?, www.eturbonews.com (3/26/2015)] there are more reported lawsuits involving Airbnb hosts including Gold Street Properties v. Freeman, 90185/2013, NYLJ, 1202660214092 (Civ. Ct. N.Y. Co. June 16, 2014)(non-regulated tenant ceased acting as Airbnb host and lease not terminated) and Board of Managers of the South Star v. Grishanova, 38 Misc. 3d 1231 (N.Y. Sup. 2013), aff’d 117 A.D. 3d 422 (1st Dept. 2014)(condo unit owner enjoined from acting as Airbnb host) as well as an anti-Airbnb website [see B. Doherty, Anti-Airbnb Rat Finks Do Freelance Urban Planning: They Know The Best Use for Everyone’s Property”, RLINK “Reason.com” Reason.com (2/24/2015)].

Travel Law Update

Getting Off The No-Fly List

In Hamblett, Prosecutor Urges Dismissal of No-Fly-List Lawsuit, newyorklawjournal.com (6/15/2015) it was noted that “Assistant U.S. Attorney Ellen Blain asked Southern District Judge Ronnie Abrams Friday to dismiss a lawsuit claiming 25 federal agents put four Muslim on the anti-terror No Fly List to retaliate for their unwillingness to act as informants. Blain told the court that lawyers for the four want to recognize a so-called Bivens cause of action and allow FBI agents to be personally liable for violation of the men’s First Amendment rights. Not only does the federal government have adequate procedures for people to challenge their inclusion on the No Fly List through the Department of homeland Security’s Travel Redress Inquiry Program (TRIP), Blain said, but to entertain the suit would be an unwise judicial involvement in matters of national security. The plaintiffs in Tanvir v. Comey, 13-c-06951…were taken off the list last week but seek money damages under a Bivens theory…Their lawyers say the TRIP program is inadequate and their clients suffered for ears because they were unable to travel to see loved ones, lost job opportunities and suffered the ‘stigma of being treated as threats to airline security’”. See our article Getting on and off the ‘No-Fly List’, www.eturbonews.com (7/23/2014).

Washington Takes Notice Of Sharing Economy

In Ruiz, Washington Scrutinizes the Sharing Economy, nytimes.com (6/9/2015) it was noted that “On Tuesday, the Federal Trade Commission held a daylong workshop dedicated to examine Internet peer-to-peer platforms like Uber, Airbnb and Postmates, and their offerings of on-demand rides, beds and slices of cake. Regulators, academics and industry representatives got together to consider the government’s place in overseeing those businesses…Vanessa Sinders of the American Hotel and Lodging Association warned against ‘rogue commercial interests’ like Airbnb that were going unregulated. In some places, she said, ‘they are simply illegal hotels’”.

Consumer Watchdog To The Rescue

In Consumer Watchdog: San Francisco home sharing law violates privacy, www.eturbonews.com (6/10/2015) it was noted that “Consumer Watchdog today said it opposes a proposed San Francisco Board of Supervisors’ ordinance that requires home sharing platforms like Airbnb to turn over massive amounts of personal information to the city, because it would violate consumers’ privacy and is little more than a ‘blank search warrant’ for law enforcement authorities. The proposed ordinance is an unwarranted intrusion into users’ privacy and inappropriately requires the home sharing platform to do the enforcement work that should rightfully be done by the city’, said John M. Simpson, Consumer Watchdog’s Privacy Project director”.

Hackers Rock & Roll

In Hard Rock Hotel & Casino Las Vegas release information on credit card security breach, www.eturbonews.com (5/2/2015) it was noted that “The sophisticated malware used in the attack may have allowed criminal hackers to steal information related to credit or debit cards…The information potentially affected includes names, card numbers, and CVV codes but does not include PIN numbers or other sensitive customer information”.

Early Mental Health Warning

In Kulish & Clark, F.A.A. Raised Questions About Andreas Lubitz’s Depression Before Germanwings Crash, nytimes.com (4/29/2015) it was noted that “The (FAA) raised questions in 2010 about whether it should grant a pilot’s license in the United States to Andreas Lubitz, who in March flew a Germanwings jetliner into a French mountainside, but was assured by his doctors in Germany that he had fully recovered from an episode of depression the year before, according to newly released documents”.

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Bird Strike Delay

In Judge: Passengers entitled to compensation if flight delayed by bird strike, www.eturbonews.com (4/29/2015) it was noted that a “Manchester County Court judge (in England) has found in favor of (an airline passenger) whose flight from Antalya to Manchester was delayed by more than five hours. Thomas Cook had refused to award compensation under EU Regulation 261/2004, arguing that the cause of the delay-a bird strike- was an ‘extraordinary’ circumstances for which it was not liable. However, (the Judge) ordered the company to pay (the passenger) and four (others) around 310 (lb) each”. See our discussion of delayed airline passenger compensation in the U.S., E.U. and elsewhere in Travel Law: Flight delays-stop making passengers pay (www.eturbonews.com (3/20/2014)].

Anti-Airbnb Host Legal Strategies

In two recently published articles the authors discuss, inter alia, what landlords and co-op boards may do to stop tenants and co-op owners in New York City from renting to Airbnb guests [see Estis & Turkel, Curability of Profiteering In Rent-Regulated Apartments, newyorklawjournal.com (5/6/2015)(the Curability article) and Higgins, Addressing Short-Term Rentals by Cooperative Shareholders, newyorklawjournal.com (5/8/2015) (the Co-Op article).

Cooperative Defense Tactics

In the Co-op article it is noted that “A battle over property rights has heated up lately, and New York City cooperatives are in the middle of it. On one side are owners of cooperative apartments who believe they should be able to let others use their apartments-their property-for short periods of time, charging them whatever the market will bear. The term ‘sharing economy’ is used to describe companies like Airbnb and Craigslist, which host Internet-based marketplaces for such arrangements. On the other side are cooperatives and their boards, which counter that a co-op shareholder who voluntarily joined a community with restrictions on properly rights must abide by those restrictions. Airbnb and its ilk, to the boards, are just a more convenient means by which rule-breaking co-op shareholders capitalize on short-term apartment rentals that violate the terms of the shareholder’s proprietary lease. The good news for cooperatives is they are winning this battle.

The board’s attorney, presented with a listing on Airbnb, can issue a default notice against the shareholder. As additional leverage, if the shareholder has a loan against the apartment, the lender will be entitled to notice and opportunity to cure under the customary form of recognition agreement. Banks do not like to see security for a loan being threatened, so a default notice copied to the lender frequently ends matters. If the Airbnb listing is pulled and the shareholder ceases short-term rentals, the problem is solved. If the shareholder does not desist, the cooperative has two choices. One is to file suit in Supreme Court, seeking an injunction to bar the shareholder from violating the proprietary lease through short-term rentals, under penalty of contempt…This approach has the benefit of starting off quick and being intense-there is a ‘shock and awe’ quality to it…the cooperative’s alternative to the Supreme Court is to trigger the conditional limitation language of the proprietary lease, serve a termination notice and commence a summary holdover proceeding in Civil Court…In sum, while the ‘sharing economy’ may have its place, a New York City cooperative is not likely to be the best place. Shareholders who wish to do ‘whatever they wish’, with their property run the risk of being stopped by the board, and paying the cooperative’s attorney fees”.

Landlord Defense Tactics

In the Curability article it is noted that “It is no secret that some rent-regulated tenants, whether through Airbnb or some other platform, are profiteering from or otherwise commercializing their apartments. The focus of this article is to survey existing case law as to when such conduct is curable and when the offending tenant can be evicted. The answer depends on whether the apartment is rent stabilized or rent controlled and whether the victim of the profiteering is a subtenant, a roommate or a transient occupant”. This article reviews “profiteering” cases involving rent-controlled and rent-stabilized apartments and disproportionate rent. Of particular importance is whether the violation of an applicable statute is curable by the tenant, simply, by stopping the rental of the apartment to an Airbnb guest or whether the violation can lead to termination of the lease. Stay tuned.

Conclusion

The demand of the services provided by Airbnb hosts is not going away. It would make good sense for all interested parties in New York City to reach a reasonable accommodation in the near future.

The author, Justice Dickerson, has been writing about Travel Law for 39 years including his annually updated law books, Travel Law, Law Journal Press (2015) and Litigating International Torts in U.S. Courts, Thomson Reuters WestLaw (2015), and over 350 legal articles.

This article may not be reproduced without the permission of Thomas A. Dickerson.

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