Co-op Boards Have Remedies If Illegal Short-Term Rentals Persist

Last week Habitat reported that since Local Law 18 went into effect in September, short-term apartment rentals have plummeted across New York City. The law, beloved by many co-op and condo boards, requires all hosts offering lodging for fewer than 30 days to apply to the Office of Special Enforcement (OSE) for a license to operate in New York City, to ensure they comply with the city’s strict housing rules. Above all, the apartment owner or renter must be present the entire time during a lease that runs for less than 30 days. The law also gives boards the option of signing up for a "prohibited buildings" list, which means no sublets are allowed. More than 1,500 buildings are now on the list.

Yet problems persist. At a midsize co-op in the West Village, a shareholder reports that the tenant in a rent-stabilized apartment continues to rent the apartment to short-term visitors through Facebook Marketplace — even though the building is on the prohibited buildings list. The shareholder asks: What rights does the co-op have to stop this forbidden and illegal behavior?

The co-op’s place on the city’s prohibited buildings list coupled with this apartment’s rent-stabilized status make short-term rentals in this unit illegal, replies the Ask Real Estate column in The New York Times. To put a stop to it in your building, you can simultaneously alert the city, the unit sponsor and the offending tenant. Report the continued rental activity to 311, including any evidence you have, such as online listings. These complaints are handled by the OSE.

The co-op should also send the sponsor a “notice to cure,” outlining in writing that this tenant is violating the law by renting the unit on a short-term basis. If the sponsor doesn’t take action against the tenant within 10 days, the co-op can likely move to cancel the sponsor’s proprietary lease, because most proprietary leases require shareholders to comply with local laws and regulations.

“The co-op has to apply the pressure to initially serve the notice to cure to start the ball rolling,” says Andrew I. Bart, who specializes in co-ops and condominiums at the law firm Kagan Lubic Lepper Finkelstein & Gold. “It would appear that the sponsor is violating the governing documents of the cooperative. That is a valid reason, if there is no cure, to terminate the sponsor’s shares.”

And what if the revolving door of short-term guests persists, and a notice to cure and a 30-day notice of termination of the shares are ignored?

“The co-op would then proceed into housing court for its remedy," Bart says, "which would be eviction following the co-op’s termination of sponsor’s shares.”

That's a big stick. Few sponsors or tenants would be willing to continue illegal short-term rentals if it means forfeiting an apartment.