New York claims real estate brokers earned $21 million from illegal Airbnb rentals

A group of New York real estate brokers has won $21 million from a series of Airbnb short-term rentals in clear violation of the city’s short-term rental laws, the city alleges in a new lawsuit.

This week, New York City continued Metropolitan Real Estate Group along with a number of associated entities and individuals, claiming to have operated at least 130 illegal short-term rentals in the city in recent years.

According to the city, Metropolitan Property Group, its landlords and others were repeatedly warned to stop violating the city’s short-term rental laws, but chose to continue doing so, earning more than $21 million. dollars in illegal revenue from Airbnb.

In its lawsuit, the city claims MPG operated illegal short-term rentals in at least five residential buildings that the company owns, controls, manages and operates in Manhattan for at least four years. According to the NYC lawsuit, units in these buildings can only be used as permanent residences.

But, according to the city, MPG’s alleged wrongdoing goes beyond those five buildings.

“Presumably, through the relationships Defendant MPG and its real estate agents allegedly cultivated, they controlled, managed, operated, offered and advertised illegal short-term rentals in the buildings in question as well as at least 30 other permanent residential buildings in Manhattan since at least 2014 with an estimate of at least 130 different apartments converted from permanent residences to transient housing,” NYC states in its lawsuit.

It is illegal under New York law to rent a unit in most apartment buildings for less than 30 days unless the tenant is present during the rental term, but according to the city, MPG frequently rented units. whole on Airbnb.

In total, the city says MPG is responsible for nearly 13,700 illegal short-term rental bookings, which generated a total of approximately $21 million in revenue from 2015 to 2018, and deceived nearly 76,000 customers who booked their accommodation through Airbnb.

The city also claims that MPG and its operators went so far as to create 18 additional corporate entities in an effort to circumvent Airbnb rules and city laws.

“The MPG Defendants and MPG Brokers often used identical contact information and inaccurate addresses to set up these numerous separate Airbnb accounts and host listings, in clear violation of the restrictions set forth by the online platform on the number of List host and address accounts for use by any individual or entity,” the city asserts.

Additionally, the city says MPG ignored repeated warnings from the city and others about allegedly illegal short-term rentals.

“Operator Defendants have ignored the actions of certain responsible building owners, and the city’s efforts to shut down their illegal short-term rental operations, with their misleading Airbnb advertisements still in place and available for unsuspecting tourists to this day,” the city says in its lawsuit.

The lawsuit was filed by the city’s Office of Special Enforcement.

“Time and again, well-meaning visitors are misled by sophisticated businessmen to book illegal rentals. Only with better data and the cooperation of booking websites can we effectively identify and stop these operations,” said Christian Klossner, Executive Director of the Mayor’s Special Enforcement Office. “Our top priority is preserving housing and a sense of community in New York City neighborhoods, and we want guests to feel safe when visiting our city.”

Asked about the lawsuit, Airbnb (which is not a party to the lawsuit) said the lawsuit provides a “clear example” of the need for new short-term rental laws in the state.

“This case is a clear example of just one thing: the ongoing need for a comprehensive statewide bill that would provide strict recourse against the few bad actors while protecting the rights of thousands of New Ordinary Yorkers who share their homes responsibly,” Josh Meltzer, head of North East policy for Airbnb, said in a statement. “Airbnb supports legislation in Albany that would do just that and we invite the Office of Special Enforcement to come to the table and work with us on a real way forward.”

Kristan F. Talley