39 Fifth Avenue, Manhattan. Image credit: CityLand
Rent-stabilized tenant substantially profited from 93 individual Airbnb sublettings. In 2010, Linda Lipetz was diagnosed with cancer and was unable to work for over a year. From March 2011 to August 2012, in order to subsidize her rent, Lipetz sublet her rent-regulated apartment located at 39 Fifth Avenue in Greenwich Village. Lipetz hosted 93 different people for 338 total days through Airbnb, charging a nightly rate of $95 for one person and $120 for two, and generating $33,592 in revenue.
The landlord, Shari Lynn Goldstein, discovered the subletting in 2012 and sued to evict Lipetz and recover lost rent. Lipetz did not deny renting the apartment, but argued that the people who sublet her apartment were “roommates” under State law and that the subletting did not violate the Rent Stabilization Code. The Supreme Court denied Goldstein’s motion for summary judgment, finding that there were material issues of fact. Goldstein appealed.
The Appellate Division, First Department, reversed, granted summary judgment for Goldstein and evicted Lipetz. The Court ruled that Lipetz sublet the apartment in a systematic fashion and for a substantial length of time, and therefore could be evicted. The Rent Stabilization Code allows for an otherwise lawful sublet of a furnished rent-stabilized apartment for a maximum of 110 percent of the rent. Lipetz could have legally sublet her apartment for a maximum of $63.58 a day. The allowable rate would have generated $21,490—$12,000 less than Lipetz’s actual revenue of $33,592.
Goldstein v. Lipetz, 150 A.D.3d 562 (1st Dep’t 2017).
This article is supposed to scare the living daylights of tenants who are doing illegal AirBNB.The most foolish mistake that the tenant in the article made was NOT to consult a real estate lawyer because if she had the real estate lawyer would have said that starting an illegal AIRBNB in your apartment might cost her a fatal eviction & this is exactly what happened. This tenant paid a high price for doing all of this AIRBNB business in her apartment surreptitiously. What the article didn’t mention is that landlords & owners are also in the illegal AIRBNB business but nothing happens to them although there have been a handful of cases only where landlords paid the price & were heavily fined. However the majority of landlords who are in this business always get away with it. As AirBNB flourishes & blooms in city living, there might come a time when it is legal for some & illegal for others but it’s coming into the fray of cosmopolitan living like a bulldozer!