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In New York City, sub-letting long-term rentals as a daily or weekly vacation rental allows many tenants to make ends meet in a place where the cost of living is through the roof.

Many do so through websites such as Airbnb, and can earn up to thousands of dollars a month.What they’re doing is illegal under both city occupancy code and state law, per an administrative judge ruling handed down in May. Still, it’s a thriving black-market industry, with about 30,000 New Yorkers signed up as hosts on Airbnb’s website.

Now, this New York City landlord-tenant law issue has some landlords taking decisive action against a practice they say is steeply carving into their profits.

In Nolita recently, sibling building owners paid $20,000 to hire a private investigator to pose as a tourist, in order to catch a tenant illegally renting out her apartment online to strangers. The New York Post reports that the tenant had been paying some $1,400 monthly for her rent-stabilized, one-bedroom apartment. However, she was allegedly earning some $4,500 monthly by subleasing the unit. She reportedly did this using two online marketing sites, including Airbnb.

The tenant used her middle name on the websites, on which she called the apartment a “Nolita Nest.” It appears the woman was living with her husband in New Jersey while she sublet the apartment. Her lawyer later explained that her brother was living at the residence for the summer. However, when the landlords questioned the tenant, he said he was a university student interning in the city for the summer. He was not a relative or even a friend of the tenant’s. He admitted he had arranged the rental on Airbnb.

Crain’s New York Business estimated that in New York alone, such illegal sublet rental arrangements will earn tenants roughly $1 billion this year. To put it into perspective, it outpaces the city’s healthy cruise-ship industry by five-fold.

Inevitably, this has a negative impact on hotels in Manhattan and throughout the city.

The Nolita landlords say their tenant has earned about $500,000 doing this over the course of the last four years.

In this situation, landlords sometimes must go through the process of evicting both the leased tenant and the subleased tenant, even if they had no formal or direct agreement with the latter.

The law was changed in 2011 to bar New Yorkers from renting out an entire apartment for a period of less than 29 days. The original bill was intended to stop landlords from illegally converting residential buildings into hotels.

However, it’s not exactly being used that way, and Airbnb is now lobbying for some leeway for those who occasionally rent a few times a year to help make ends meet. If officials were to grant Airbnb’s request, it’s unclear what kind of regulatory concessions – if any – city and state leaders could make so that the terms would be agreeable to landlords.

Part of the problem is that landlords still maintain liability for what happens on the property, regardless of who is occupying the unit. So when someone sublets, they have no control over who is in that unit. Many times, when the deals are conducted over the internet, even the tenant doesn’t know the person. The two may never even meet in person.

Still, as this case shows, many New Yorkers are continuing to simply take their chances and hope they aren’t caught. The law is only enforced when a complaint is filed.

According to the Mayor’s Office of Special Enforcement, the city has received some 3,100 complaints and issued some 6,200 violations since 2006. Many times, one unit or tenant is cited for multiple violations.
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Our New York City landlord and tenant lawyers hope this finds you well as we all continue our recovery from Hurricane Sandy.The exact toll of the damage is still not yet clear, though we know that the Federal Emergency Management Agency, or FEMA, has approved nearly $665 million in federal aid for victims of the storm. We understand that some 230,000 New Yorkers have requested assistance from the agency. The hardest-hit areas include Nassau County, which will receive roughly $225 million, while Queen County will get about $170 million. In Richmond County, where Staten Island is, FEMA will dole out about $70 million.

Thusfar, FEMA has carried out more than 130,000 home inspections in the state, and those are ongoing.

As we all piece our lives and livelihoods back together, it’s important for both landlords and tenants to understand their obligations and rights following a disaster.

Clauses in a lease agreement that cover such disasters are called “force majeure” agreements, and they derive from the French term, “greater force.” Essentially, these clauses may relieve one party of certain obligations due to some force beyond their control, i.e., a natural disaster, such as a hurricane, tornado or earthquake.

Following the 9/11 terror attacks, there were a host of lawsuits filed under the force majeure clause, and now case law in the state has established that the clause must explicitly spell out the event or act that would prevent one of the concerned parties from performing their obligations under the lease term. That case was 1 World Trade Ctr. LLC v. Cantor Fitzgerald Sec. What this means is that you cannot underestimate the importance of a well-written lease agreement that addresses all possible scenarios. To give you an idea of how specific this must be, in the case of the attacks by terrorists, the phrase “acts of war” alone might not be enough to protect one from failure to uphold obligations under the lease. That’s why since 2001, we’ve seen terms on some leases that include phrases like, “public enemies” or “enemies of the state” and even references to dirty bombs.

If it seems excessive, the last 11 years in New York City have taught us you must be prepared for almost anything.

Failure to do this may result in a case of liability, such as what happened in Marketfare St. Claude, L.L.C. v. Melba Margaret Schwegmann Brown. This was a case that was filed in the U.S. District Court in the Eastern District of Louisiana after Hurricane Katrina. A grocery store tenant held a lease with the owner of the building. The grocery store contended that the owner failed to make any repairs on the building after the storm. The argument was that the building could have re-opened in April 2007, had the building owner complied with his obligation to address the damages and restore the structure in a “timely manner” after the storm. The terms of the lease required that in the event of a disaster, the owner had a responsibility to begin restoration as soon as it was “reasonably practical.”

A jury sided with the plaintiff, which it awarded $2.3 million in lost profits. Plus, the landlord is required to fix the building at a cost of $3 million and pay the tenant upwards of $40,000 in future lost profits for each month that the repairs go unfinished.

It’s a costly lesson, and one we hope New Yorkers can learn from.

If you are a landlord or tenant whose property was damaged in the wake of the storm, call us to learn more about your legal rights and obligations.
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