Illegal hotel penalties spike in last year

Violations under new law can cost residential landlords thousands of dollars per incident

Apr.April 27, 2012 01:00 PM

The number of violations issued against residential landlords who illegally house temporary occupants in their apartment buildings has more than doubled in the wake of 2011 state legislation curbing illegal hotels, according to data provided to The Real Deal today by the office of Mayor Michael Bloomberg.

The administration’s Office of Special Enforcement task force issued 1,897 transient occupancy violations in 2011 – almost two-and-a-half times more than in 2010 – and about 96 percent, or 1,820 violations, have been issued since the law took effect in May 2011, the data through Dec. 31, 2011 show.

The New York State law prohibits landlords from renting out Class A residential space for less than 30 days at a time, making it illegal to rent out apartments for short-term stays. Penalties range from $800 to $2,400 per violation.

The Bloomberg-backed legislation came amidst complaints from hotel owners that single-resident occupancy hotels and illegal sublets were siphoning business from them, as record numbers of tourists flocked to New York City. But the law was  intended to address concerns that illegal hotels limit available housing by letting visitors inhabit apartments and present safety and security issues.

“When residential apartment buildings designated for permanent occupancy are illegally converted into hotels, they create unsafe, hazardous conditions and threaten the character of our neighborhoods,” Bloomberg said in a statement.

Additionally, the legislation cleared up ambiguities in the existing law, allowing city officials to more readily enforce rules related to transient occupancy, as the numbers released today demonstrate.

But that has created headaches for landlords, who are liable for fines even if tenants are responsible for renting out space, according to Robert Fried, an attorney with real estate consultancy Jack Jaffa & Associates who regularly defends landlords against these violations.

The crackdown is putting landlords in a tricky position, Fried said, since they face violations for the short-term occupants but then often face additional penalties for failing to provide those illegal short-term occupants with safety features required of hotels.

“Instead of issuing one violation for an occupancy contrary [to legal use], they’re issuing seven or eight violations,” Fried said, adding, “This whole thing could totally get out of control.”

For example, one of Fried’s clients was docked with 11 violations after city inspectors found six individuals living on bunk beds in one third-floor apartment at 2610 Frederick Douglass Boulevard on the corner of West 139th Street in Harlem, according to Department of Buildings records.

While the initial occupancy violation was dismissed, the landlord now faces thousands of dollars in fines for failing to provide safety measures like adequate exits, exit signs and an automatic sprinkler system, each of which come with a $1,600 penalty, records show. A partial stop work order on the property is still in effect.

The building owner, which is listed as 1610 Realty LLC in city records, declined to comment through Fried.

Additionally, administrative judges at the city’s Environmental Control Board who rule on challenges to these violations are still unsure of how to interpret the May law, leading to inconsistent rulings, Fried said.

The situation hasn’t reached a boiling point yet, Fried said, “but it’s about to.”

Supporters of the law say it provides city officials with an essential tool to abolish illegal hotels, improving the safety and livelihood of New Yorkers and opening up apartments for additional housing.

“It is New Yorkers living in these units who have had to deal with challenging and illegal uses, such as six tourists to one room, loud noises at night, broken elevators due to excessive use, lack of security and lack of fire equipment creating fire hazards as backpackers fill rooms and hallways with drinking and becoming ill,” City Council member Gale Brewer said in a statement today.

In addition to the occupancy violations, the Office of Special Enforcement issued 51 vacate orders in 2011 for immediately hazardous conditions, an increase of 75.9 percent over the previous year. Forty of those orders were issued since May.

“Today’s news is a clear indication of the progress being made,” Bloomberg said, “but we need to continue to be vigilant in order to tackle the issue of illegal hotels and the serious quality-of-life problems and safety hazards they create.”

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