Residential owners, managing agents, and owners of mixed use and multi-family portfolios with residential units in New York City should be aware that, effective Tuesday, September 5, 2023, the New York City Mayor’s Office of Special Enforcement (the “OSE”) has begun enforcing new rules promulgated under Local Law 18, which regulate rentals booked through short-term rental platforms, such as AirBnB, Booking.com, and VRBO (each a “Booking Service”).

Local Law 18 requires permanent occupants of dwelling units who intend to offer short-term rentals to paying guests to first apply and obtain a registration from OSE for the unit to be permitted for use as a short-term rental.  The law also requires Booking Services to verify, via an electronic verification system maintained by the OSE, that the short-term rental transaction conforms to the law’s requirements.   Effectively, Booking Services are now prohibited from processing transactions for short-term rentals in New York City unless the owners of the units who would be hosting have provided evidence of (i) having registered the applicable unit with OSE in compliance with Local Law 18 and (ii) complying with all applicable legal requirements for such short-term rentals.

The law also creates a Prohibited Buildings List.  The law mandates that OSE deny registration for any owner of a unit that is located in a building that is placed on the Prohibited Buildings List, which occurs when an owner of a building notifies OSE that such owner forbids short-term rentals in its respective building.  Consequently, an owner who wishes to preemptively prevent permanent occupants of dwelling units from engaging in short-term rental transactions through a Booking Service may apply for inclusion on the Prohibited Buildings List.

On March 6, 2023, the OSE started reviewing and processing registration applications from permanent occupants of dwelling units who intend to offer short-term rentals to paying guests.  Permanent occupants of dwelling units who desire to register with OSE are permitted to do so via OSE’s website, and are required to provide the following information:

(A) Full legal name; (B) A current phone number; (C) Full physical address where short-term rental will take place, including street number, street name, zip code, borough, and unit number where there is more than one dwelling unit in the building; (D) An email address that will be used to receive communication from the administering agency, or other alternate means of communication acceptable to the administering agency; (E) Type of dwelling unit, where known to the applicant (e.g., single family building, apartment in a two family building, apartment in a building with 3+ units, condominium, apartment in a co-op building); (F) The number of individuals not related by blood, adoption, legal guardianship, marriage or domestic partnership that reside with the registrant in the unit; (G) The uniform resource locator or listing identifier and the associated booking service name for all existing listings of the dwelling unit; and (H) Whether the applicant is a tenant or owner of the dwelling unit.

The application fee for registration is $145.  Tenants in NYCHA, rent controlled, and rent stabilized apartments are precluded from short-term rental registration.  Rentals of 30 consecutive days or more, and short-term rentals of units in “Class B” multiple dwellings, which have been approved by the City for legal short-term occupancies, are exempt from the registration requirement.  Individuals who violate Local Law 18 will be subject to certain penalties.

A Booking Service will have to periodically submit to the administering agency a report of transactions associated with a qualifying listing for which the Booking Service charged, collected, or received a fee. Any Booking Service that fails to submit a report in compliance with Local Law 18 will be liable for a civil penalty of the greater of $1,500, or the total fees collected during the preceding year by the Booking Service for transactions related to the qualifying listing.

Note that Local Law 18 does not change the existing criteria that govern the legality of short-term rentals.  For example, the host still must stay in the same unit or apartment as the guests in any short-term rental, and there may not be more than two paying guests staying with the host at a time during a short-term rental. It should also be noted that while full enforcement of this law began effective as of September 5, 2023, Airbnb is in the process of challenging this law in court, as Local Law 18 poses a real threat to Booking Services. We will be closely monitoring that case, which is still pending.

Interested parties who would like to learn more about Local Law 18 or that have any questions are encouraged to contact our Real Estate and Litigation practice groups at Moses Singer, who regularly advise clients with respect to commercial leasing, lease disputes, and regulatory disputes.