Court Upholds Law Requiring Registration of Short-Term Apartment Rentals

In a ruling sure to thrill co-op and condo boards, Judge Arlene Bluth of New York State Supreme Court has rejected Airbnb's attempt to overturn Local Law 18, which requires short-term rental hosts to register their units with the city before they can get paid. With the failure of Airbnb's last-ditch legal ploy, Crain's reports, the law is scheduled to go into effect in the fall. 

“Requiring that a listing have a registration number and that Airbnb only accept fees from listings with a valid registration number makes perfect sense,” Judge Bluth wrote in her ruling. “It is a method designed to streamline the process of ensuring that only eligible spaces appear on Airbnb or other listing sites.”

The rule was created when the city council passed Local Law 18 in late 2021, following several previous attempts by the city to rein in illegal short-term rental bookings. Registering a unit with the Office of Special Enforcement means a host has to agree to comply with a long list of rules from the city’s housing code, including that no unit is rented for fewer than 30 days unless a host is on premises the entire time, and that no more than three unrelated adults are in an apartment at one time.

The law also created a so-called "prohibited buildings list," which prevents any resident of the building from registering with the Office of Special Enforcement. So far nearly 9,000 buildings, including many co-ops and condos, have signed onto the list.

The registration of eligible short-term rentals has moved much more slowly. The city’s Office of Special Enforcement had approved just 141 registrations as of July 25, according to documents filed in the case. Just under 250 were returned to applicants for more information, while 29 were denied. Another 1,300 have been submitted. Judge Bluth chastised the city for its “glacial pace” in processing applications but said that was not enough basis to let the lawsuit play out.

Airbnb reported profit of $650 million on revenue of $2.5 billion last quarter, its most profitable second quarter ever. Airbnb has said it nets about $85 million annually from New York City stays, and it claims Local Law 18 will eliminate 95% of those revenues.

“This law has been a long time coming, and our clients welcome it,” says Dennis DePaola, an executive vice president at Orsid New York, which manages about 200 co-ops and condos. “Critics feel it’s a law for the rich, but residents of all classes don’t want to endure living next to a hotel room.”