New City Law Mandates Short-Term Rental Limitations for Co-Ops and Condominiums

Local Law 18, also known as the short-term rental registration law, came into force last September and affects three things: the hosting platform itself, like Airbnb or Vrbo; the individual who is renting out his or her apartment; and the building owner, including co-ops and condos. Boards that want a complete ban on all short-term rentals can now apply to register their buildings on the city’s prohibited building list by filling out an application online. But in order to get on the list, there has to be some provision in your governing documents that specifically prohibits short-term rentals. 

Most buildings don’t have that in their documents. The proprietary lease in co-ops or the bylaws in condominiums probably only touch upon the issue in the general sense of a guest policy, but not specifically short-term rentals, which is 30 days or less. So what we’re recommending is that boards pass a house rule that expressly prohibits them. It won’t affect guest policies like your mom and dad visiting for the week, but it will stop short-term rentals that someone is clearly using for another means of income. After that, you can propose the more authoritative step of amending your governing documents at the next annual meeting.  

If the board changes the house rules and someone continues to list their apartment on a hosting platform, you can report it to the city’s Office of Special Enforcement (OSE). There are penalties involved, ranging from $100 to $5,000. It’s more complicated if the shareholder or unit-owner registered their apartment with OSE and posted their ad online, and then a month later the board comes in and says, “We just got on the prohibited building list. You have to remove it.” The board would have to file a complaint and attend a hearing to plead its case as to why its getting on the prohibited building list should trump the host’s initial registration. It’s a new learning experience, and we’re all working our way through it. But the takeaway is clear: If your governing documents are missing a prohibition on short-term rentals, now is the time to start drafting the language and putting things in place.