Illegal Hoteling: Preventative Steps to Protect Your Building from Transients

First, the good news: They're not. There is a law against using residential New York units as transient hotels. It went into effect in 2011 and defines "transient" as stays of fewer than 30 days. And many co-ops and condos have their own bylaws and house rules designed to prevent multiple short-term rentals for reasons ranging from security to preserving real-estate values.

The bad news is that many owners and shareholders have a powerful financial incentive to circumvent the rules and regulations: New York City hotels are among the most expensive in the United States, averaging $325 a night, meaning the demand for alternative accommodations is high. So, goes the argument, if you're planning on taking an extended vacation or intend to sell but want to wait out a weak market by bunking elsewhere, why not make your apartment earn its keep?

That equation looks different from a co-op / condo board perspective: illegal short-term renting compromises overall security; encourages careless property damage that can extend beyond the offending apartment (one Manhattan co-op board member, Alberto Goldberger, recalls a garden party by illegal lessees that left candle wax all over the teak outdoor furniture); raises quality-of-life issues (excessive noise, smoking in no-smoking areas); may precipitate the loss of 421A tax abatements; and may make it hard for owners and shareholders to sell their properties, since many banks are skittish about writing individual mortgages on units in buildings with low owner-occupancy levels.

Be Aware 

What's are condo or co-op boards to do when owners and shareholders are determined to circumvent the rules? First and foremost, says Beth Markowitz, president of Merlot Management, "It's an issue of managing, which means being aware of what's going on in the building."

And the consensus is that building employees — doormen, resident managers, superintendents — are the first line of defense: "In our case, it's usually the staff that notices," says Wayne Broome, who's on the board of a midtown Manhattan co-op. "Generally the tip-off is people with a lot of luggage asking for keys. We have a doorman five days a week, and a security service for the lobby. We have a pretty regular crew, so they're like building employees."

The tip-off is people

with a lot of luggage

asking for keys. 

"It's also important to have the right [documenting and reporting] systems in place and to keep them up to date," advises Dan Wurtzel, president of Cooper Square Realty, "but systems are only as good as the people using them." 

Michael Wolfe, president of Midboro Management, concurs, adding that "some buildings translate rules into other languages for employees who aren't fluent in English."

Transients in Elevators with Children

No board wants to create a building-wide atmosphere of suspicion and mistrust, and many unit-owners/shareholders may not be comfortable with what can feel an awful lot like spying. But making them aware of the potential consequences of unregulated short-term rentals can cast the situation in a different light. It's not narcing on your neighbors to let building management know there's a parade of strangers traipsing in and out of a unit that opens onto the same corridors and is accessible via the same elevators their kids and spouses use every day.

Let management know

of strangers in the same

corridors and elevators

as your kids and spouses.

"Surveillance cameras can help management identify apartments where there's a lot of suspicious activity," advises attorney Elliott Meisel, a partner at Brill & Meisel. However, he warns, "If you set up a camera that's focused on one door, the building could be open to a legal challenge on the grounds of unlawful surveillance." He adds: "A building with security cameras in the elevators and corridors wouldn't be vulnerable to that."

Attorney Geoffrey Mazel, a partner at Hankin & Mazel, also suggests flagging checks printed with an address other than that of the building. "One co-op I represented did a mailing to shareholders whose addresses didn't match, asking them to explain. Some responded that they lived in Florida part of the year or something else reasonable; other cases merited further investigation."

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