Airbnb Files Suit Over Law Curbing Short-Term Rentals

Co-op and condo boards applauded earlier this year when the city enacted Local Law 18, which was designed to cut down on the scourge of illegal short-term apartment rentals in their buildings. 

“I love Local Law 18!” Stuart Saft, a partner at the law firm Holland & Knight and chairman of the Council of New York Cooperatives & Condominiums, said shortly before the law went into effect in January 2023. “Building owners, including co-op and condo boards, can now register with the city to forbid short-term housing.”

Local Law 18 did not change the underlying rules governing short-term rentals. In buildings with three or more units, it remains illegal to rent housing for fewer than 30 days if the owner or lease-holder is not present during the entire rental period. What did change under Local 18 is that anyone seeking to rent out housing for fewer than 30 consecutive days in New York City is now required to register with the Mayor’s Office of Special Enforcement and obtain a registration number. Booking services such as Airbnb and Vrbo are now required to verify the short-term rental registration number of any accommodation before listing it on their service.

Even more crucially, co-op and condo boards and other building owners can sign on to a list of “prohibited buildings,” in which all short-term rentals are forbidden. More than 8,000 buildings have signed on to the list.

As much as Stuart Saft loves Local Law 18, Airbnb detests it. So much so that the home-sharing platform, claiming the law has cost it $85 million in annual revenue in New York City, has filed a lawsuit to undo the law, The New York Times reports. In the lawsuit, Airbnb called Local Law 18 “extreme and oppressive” and said it clashes with a federal law that has shielded many tech platforms from liability for content posted by its users. 

That federal law, Section 230 of the Communications Decency Act, has come under fire by some lawmakers who say it is too broad in the protections it provides technology companies. Airbnb said in the lawsuit that the city’s rules improperly “seek to hold Airbnb liable in its role as a ‘publisher’ of posts by third parties,” in violation of the law.

Hosts could face penalties of up to $5,000 for renting apartments that are not registered with the Office of Special Enforcement, and Airbnb could face penalties of up to $1,500 for transactions involving rentals that were not properly verified. The city will begin enforcing the law in July.

This latest legal salvo is unfolding against a backdrop of the city’s chronic lack of affordable housing, record-high rents and a hotel industry that is still suffering from the after-effects of the pandemic. Given those realities, short-term rentals have become a frequent target for local activists and politicians, who say many of the listings amount to “illegal hotels” that take affordable homes off the market — while lowering the demand for hotel rooms. Influential — and deep-pocketed — groups associated with the hotel industry have also aggressively fought Airbnb and similar platforms.

To the delight of many co-op and condo boards and to the dismay of Airbnb, those combined forces appear to be winning the war against illegal short-term rentals in New York City.