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New law restricts Airbnb's advertising in New York

It's a tradition for many to visit New York City during the holiday season to shop, see the parade or catch a show. While a decade ago that would have meant staying at a Midtown Hotel or somewhere in Greenwich Village, Airbnb, the home-sharing company, has transformed the NYC visit for many in recent years by putting out-of-town guests in the homes of strangers renting to them.

New York prohibits advertising the rental of certain dwellings for less than 30 days

Is this another dot-com bubble bursting now that new rules about advertising short-term apartment rentals were signed into law by New York Governor Andrew Cuomo on Oct. 21? The new law states that it is illegal for residents of Class A multiple dwellings (buildings with three or more residences) in New York City and across the state to advertise renting their full home for fewer than 30 days. 

Airbnb is fighting back, however. The company filed a suit against the City of New York and State Attorney General Eric Schneiderman.

How the law affects Airbnb

There was already a law in New York City that prohibited the rental of an apartment in a Class A building for fewer than 30 days. But the company and its renters had generally ignored the this law, making NYC the biggest Airbnb market in the country with an estimate in August of 45,000 listings. This new rule against advertising allows regulators to monitor the company's website for clients offering up illegal rentals and fining them. The law allows fines of $1,000 for a first offense, $5,000 for second and $7,500 for the third. Individual hosts and Airbnb may be subject to fines. 

What can owners and Airbnb users do?

Visitors in New York City may still legally rent whole standalone homes, duplexes or single rooms within a Class A multiple-dwelling residence for fewer than 30 days. They can also rent a Class A multiple dwelling residence for more than 30 days. Such rentals are only permitted if authorized by the lease and with permission of the landlord. Tenants may be subject to eviction for such unauthorized rentals.

There have been reports of guests showing up to use a space they paid for and being turned away immediately or before the end of their rental due to this new law. While guests will not be fined under the law, it would be a huge (and expensive) inconvenience to find a room rental immediately.

If you are contemplating renting your apartment or a room within it, it's best to check co-op or condo bylaws or your rental lease agreement to see what is allowed. You don't want to risk eviction in addition to potential fines from the new law.