How Home Sharing Puts Multifamily Properties at Risk

Posted on Friday June 05, 2015 |

By Dan Wurtzel, President, FirstService Residential

The increasing popularity of short-term rentals, primarily driven by home sharing websites like Airbnb, poses a serious threat to the safety, security, quality-of-life, and sense of community within New York City’s residential buildings. Although the city’s Multiple Dwelling Law (MDL) prohibits renting out an apartment for fewer than 30 days, illegal subletting continues to proliferate. 
 
Importantly, short-term leasing can jeopardize a building’s 421-a tax abatement. Below are some additional risks stemming from this practice.
 
Safety
 
Several New York City building, fire and housing codes mandate stricter safety standards for dwellings rented on a short-term basis. Hotels, for instance, are required to provide portable fire extinguishers, automatic sprinkler systems, photo-luminescent exit path markings for exits and stairwells in high rise buildings, manual and/or automatic fire alarm systems on all floors with smoke detection capability, and a fire safety and evacuation plan. Illegal units in residential buildings are not required to provide these safety protections.
 
Compounding that, what if the unit owner or shareholder hasn’t posted the required fire safety notice on the back of their apartment door? Transient individuals will not know the safest course of action in the event of a fire, placing them at increased risk of injury or death.
 
Another possible hazard may be the absence of window guards in an apartment, which also increases the risk of injury or death for young children. Furthermore, if illegal walls have been constructed, individuals may not have adequate means of egress, which can lead to tragic consequences for temporary occupants, as well as for neighbors and first responders. 
 
Most of the laws in New York City put the burden of compliance on the "owner" of the building, be it a landlord of a rental property, the board of directors of a cooperative or the board of managers of a condominium. Using one example from above, if an apartment is "rented" short term to someone with a child under the age of ten, but that apartment does not have window guards, should the child be injured as a result of this, the liability could be placed on the landlord, or individual members of the board. While insurance may cover some of the damages, the window guard law also imposes criminal liability that is not insurable.
 
Security
 
Another concern is that criminal background checks are not undertaken, nor are identities verified, for illegal renters using services such as Airbnb. Bypassing the proper screening procedures normally required for subletting presents a serious security threat to other residents. Providing entry privileges to the building, as well as to its shared amenities, can open the door to an undesirable element – or worse, criminals – giving them access to residents, corridors, stairwells, gym, pool, locker rooms and lounges.
 
Community Impact
 
In addition, with a vacationer mindset, transients will move about with less care than permanent residents – adding wear-and-tear to common areas and potentially abusing amenities. The building’s sense of community will also be threatened by these anonymous lodgers. Concern for neighboring apartments is much less likely to be considered with regard to noise, odors, cigarette smoke, and more.
 
Not only can this practice hurt the reputation of the building, it can also devalue the apartment as a real estate investment.
 
What Boards and Owners Can Do
  • Understand your building’s governing documents as they relate to leasing apartments; if the language is vague regarding permissible length, consult with counsel before enacting specific rules.
  • Use FSRConnect or your front desk system to track all guests – including names, photos, length of stay, and contact information – which will also alert the front desk and management of the expiration date.
  • Do not permit strangers in the building unless an owner or shareholder is present in the apartment, or without written authorization from the managing agent.
  • Train building personnel on how to respond to suspicious “guest” activity.
  • Document unauthorized occupancy activity with detailed information (e.g. occupancy and/or vacate dates, names of occupants, etc.) to create prima facie evidence in the event of legal action against the unit owner or shareholder. 
  • Institute penalties to anyone found to be permitting illegal tenancy. Some buildings have instituted fines up to $1,000 per night, and are also charging back any legal fees incurred by the building to enforce compliance with the law and the building’s governing documents.
  • Lock-out electronic key or fob access to amenities to units found to be in illegal occupancy.
  • Alert building residents, unit owners and shareholders to the problems and pitfalls of illegal short term rentals and recommend a “see something, say something” process for notifying the Resident Manager/Super or Managing Agent to investigate.
 
Implementing these measures will help your building remain a desirable and high quality residence while ensuring and maintaining the safety and quality of life for its residents.
 
 

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