On June 28, 2016 Michelle Maratto Itkowitz taught a Lawline Continuing Education program entitled Short Term Leasing Evictions; the program focuses on residential evictions resulting from tenants engaging in illegal Airbnb and similar rentals. Learn what is legal and what is not, and what to do about it -- this program is good for landlords OR tenants! The reviews for this one have been outstanding. So far it's got 100% rating - "She was great! More courses by her please!"
On August 28, 2016 Michelle answered this Lawline student's question --
Is an individual co-op or condo apt. covered by the multiple dwelling law and what short term leasing provisions apply to co-op or condo apt. owners besides getting board approval? Also, what are the liability insurance issues that arise and how can they be addressed by people who rent out their unit?
Yes! The Multiple Dwelling Law applies to coops and condos! And, therefore, so does the prohibition against short-term leasing.
I will give you a few other examples of how the MDL applies to coops and condos.
The case that established that the landlord had a nondelegable duty to deal with bedbugs in a Multiple Dwelling was in a coop. Zayas v. Franklin Plaza, 23 Misc.3d 1104(A) (NYC Civ. Ct. NY Cty. 2009).
MDL § 78 requires the “owner” of every multiple dwelling to keep the dwelling in good repair. Liability for negligence in keeping the roof of a condominium in good repair was imposed on the sponsor in Liberman v. Cayre Synergy, 73rd LLC, 108 A.D.3d 426, (1st Dep’t 2013). The court concluded the sponsor owed a nondelegable duty to keep the condominium, including its roof, in good repair, citing MDL § 78. Sponsor breached that duty because the original roof installed did not render the condominium watertight and there was water infiltration into plaintiff’s unit.
Similarly, the requirement in the MDL that a janitor must be provided for any Multiple Dwelling occupied by 13 or more families has been applied to condominium developments. Hatcher v. Board of Managers of the 420 West 23 Street Condominium, 12 Misc. 3d 78 (App. Term 2006), order aff’d, 39 A.D.3d 436 (1st Dep’t 2007). In Hatcher, a nonresident superintendent was employed. In this case, similar to the others, the board of managers was treated as the “owner” for purposes of compliance with statutory provisions.
So…coops and condos located in multiple dwellings (3 or more units) are not getting out of the fact that the prohibition on short-term leasing is codified in the definitions section of the MDL. MDL § 4(8)(a).
Ok so let’s talk about your insurance liability question.
As of this writing, there are no reported cases where a tenant sued a landlord because he or she was harmed in a Multiple Dwelling by another tenant’s short-term leasing guest. Depending on the factual circumstances of such a hypothetical occurrence, however, it is possible that a landlord would be liable and that her insurance would NOT cover the loss.
In Bello v. Campus Realty LLC, 99 A.D.3d 638 (1st Dept. 2012), a multi-family building’s residents brought a premises security action against building’s owner after they were robbed by intruders. The appellate court held that genuine issues of material fact existed that precluded summary judgment in the tenants’ premises security action. The question the trial court needed to contemplate was whether the landlord breached its duty to take minimal security precautions to protect residents from foreseeable criminal acts by failing to remedy an allegedly broken lock on the building’s front door entrance, despite notice of the dangerous condition, and whether the robbery of the residents was foreseeable, given the evidence of prior crimes, including robberies in and around the building.
The appellate court made the same decision in Carmen P. by Maria P. v. PS & S Realty Corp., 259 A.D.2d 386 (1st dept., 1999) when a fourteen-year-old tenant brought negligence action against landlord for breaching his duty to take precautions against foreseeable criminal assaults on tenants after she was raped by an unknown assailant who forced his way into her apartment. There was evidence that intruders loitered in the hallways, committed robberies, assaults, and drug crimes in the building, and that tenants complained about lack of security.
I have had landlords report to me that their tenants are complaining repeatedly in writing to them about illegal short-term guests of other tenants loitering in the hallways and having raucous parties. The question remains open as to whether such a landlord would be liable if a tenant was harmed by a short-term leasing guest.
In NYC v. Lorimer LLC, ECB Appeal No. 1400672, September 18, 2014 (affirmed 11/20/2014 under Appeal No. 1401013), a tenant who rented four apartments in a multiple dwelling converted them to transient use, resulting in violations and fines. The landlord testified that he had no idea that the tenant had done this and it would have been impossible for him to access these apartments. The ECB did not find this testimony credible, because increased traffic in the building should have alerted landlord to the problem, and landlord did not show that he either physically or legally attempted to gain access and deal with the problem.
The writing is on the wall, in my humble opinion. Have you ever dealt with an insurance company. I will give you a hint – they like to deny claims. If you burn your building down because you are engaged in an illegal act, are you covered? If coop subtenants - or WORSE shareholders - are renting the units illegally on Airbnb and other short-term leasing cites, and there is a loss occasioned by those guests (you don't even burn the building down, guests you never met do!), then I am guessing that neither the shareholder’s nor the board’s insurance would cover the loss. I am not an insurance lawyer and I do not know. I wouldn’t want to be rolling those dice.
Let me know if you need anything else.
Michelle Maratto Itkowitz