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Short-Term Renting in the Sharing Economy

On July 29, 2017  Michelle Itkowitz presented at NYSBA Real Property Section Summer Meeting on "Short-Term Renting in the Sharing Economy"The materials are up in the booklet section of the site and below is an excerpt from a section where upstate New York's approach to the sharing economy is contrasted with New York City's. The full title of this CLE presentation was:


Short-Term Renting in the Sharing Economy

From Airbnb to HomeAway
From Upstate to Downstate
From Tall Buildings to Single Family Homes
From Landlords to Tenants
From Home Owners’ Associations to Zoning Boards,
From Hosts to Guests

How the Law is Struggling to Keep Up with Short-Term Residence Sharing


ExcerptIII. UPSTATE NEW YORK AND HOME SHARING

Upstate New York is struggling with the short-term renting of homes, occasioned by the sharing economy. These battles play out over zoning regulations and condominium bylaws that were not drafted in contemplation of home sharing.

A. Zoning Resolutions

1. Garretson v. Zoning Board of Appeals of the Town of Geneva, et al., Supreme Court of the State of New York, County of Ontario, Index No. 111943

For much of this section, I must thank and acknowledge Alan J. Knauf, Esq. of Knauf Shaw LLP . Alan sent me the Garretson case from Ontario County. As per Alan’s June 3, 2017 email to me:

"I represented homeowners on Seneca Lake in the Town of Geneva after the Town refused to let them rent their lakefront houses on a weekly basis…. Attached is the decision annulling the Zoning Appeals Board decision and our briefing, which led to the attached new Town regulations of short-term rentals that our clients acquiesced to, so the dispute ended."

Garretson was a fascinating case. I am only going to hit the highlights here. 

Petitioners were the owners of five houses on Seneca Lake, which were in an R-1 Residence District. On December 2, 2014 the ZBA affirmed a decision of a Town zoning officer that determined that the houses had become “vacation resorts” not permitted in an R-1 district and that the houses could no longer be rented. The Petitioners filed an Article 78 to annul the order.

The Town code stated that “One-Family Dwellings” were allowed in R-1 districts. “One Family Dwellings” were defined as, “buildings contained one dwelling unit only”. Although the code went on to clarify that “dwelling” shall not be deemed to include motel, hotel, or rooming houses, or other accommodations used for transient occupancy. “Hotel” is defined as a “building or any part thereof, which contains living and sleeping accommodations for transient occupancy, has common exterior or entrances and which may contain one or more dining rooms.” And “transient” is NOT defined in the Town code. Thus, the zoning ordinance did NOT contain any minimum amount of days that one family could rent a One-Family Dwelling. 

Petitioners’ position was that the Town may not disallow Petitioners’ rental of the houses by attempting to classify the rentals as “transient”. Petitioner’s homes all contained only one dwelling unit each. Petitioners’ contention was that nothing changed the houses from One-Family Dwellings just because they were rented to a family on vacation. 

Petitioners backed up their position with a lot of appellate case law, including case law that the un-defined term “transient” could not be construed against Petitioners, especially since the renters were screened by the homeowners, which is something a hotel would not do. Neither the Town’s definition of resort nor Wikipedia’s definition comported with the use Petitioners were making of their homes by renting them to other families on vacation while owners were away from the houses. 

Petitioners got the proceeding remanded! The Supreme Court said:

Inasmuch as all renting is not forbidden by the code (only transient occupancy is disallowed), the Zoning Board of Appeals must determine whether the individual Petitioners were properly issued a compliance order based upon the manner in which each individual Petitioner was renting his or her property. Further testimony before the ZBA is needed to determine this issue.

Inherent in the definition of transient is a focus on the length of stay for each guest at the accommodation. The record of the proceeding before the ZBA is lacking testimony regarding the length each of Petitioners' renter(s) stayed at the premises. Notably, in the case cited by Petitioners, Atkinson v Wilt (94 AD3d 1218), the Appellate Division, in determining that the petitioners' property did not constitute a tourist accommodation (the definition of which included "transient facility"), was presented with facts that the petitioners rented their home on a weekly basis.

As Mr. Knauf told us above, the story ended with the Town of Geneva re-writing the local regulations on short-term rentals, to which the homeowners acquiesced. Before I read the new regulations, I thought that the Town would do what NYC did and simply define “transient”. Instead, Town of Geneva Code §165-28.6 now requires an owner to obtain a revocable short-term rental permit whenever a dwelling unit is to be used for short-term rental purposes. “Short-term” still is not defined. Among other things, the property owners must, however, certify compliance with the following standards:

"There shall be one functioning smoke detector in each sleeping room and at least one functioning smoke detector in at least one other room, one functioning fire extinguisher in the kitchen and at each exit, and at least one carbon monoxide detector.
Exterior doors shall be operational and all passageways to exterior doors shall be clear and unobstructed.
Electrical systems shall be serviceable with no visual defects or unsafe conditions.
All fireplaces, fireplace inserts or other fuel-burning heaters and furnaces shall be vented and properly installed.
Each sleeping room shall have an exterior exit that opens directly to the outside, or an emergency escape or rescue window…"

The new regulations also address:
  • the number of people who can occupy the dwelling based upon the number of sleeping rooms,
  • the sufficiency of a private septic system,
  • the provision of off-street parking,
  • the removal of garbage, and
  • compliance with noise level requirements between 10:00 pm and 7:00 am
Owners must be clearly identified and contactable. Guests must be given information about the rules, including things such as, “all fires must be attended” and “littering is illegal”. 

Several of the cases cited by petitioners in Garretson reveal that there are zoning regulations in various jurisdictions upstate that assign a specific durational limit to “transient” rentals. My best guess is that the Town of Geneva did not do when rewriting the code because it does not want to stunt short-term vacation rentals of single-family homes. The Town, however, obviously does want to prevent fires, overcrowding, septic system overflows, too much on-street parking, excessive garbage, excessive noise, and littering. Therefore, the Town dealt with those things explicitly.

As a lawyer involved in litigating cases in NYC where “transient” is clearly defined, I can see why the Geneva Town Code has its advantages. All of the things that permanent tenants and landlords hate about an apartment with a steady stream of short-term guests can still be problematic if the guest stays 31 days. The guests can still have loud parties. The guests can still damage a building that they have no stake in. And, G-d forbid, they can be confused on their way out in a fire. 

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