NYC sues short-term rental operator for allegedly misleading tourists

October 23, 2012 02:30PM

The city filed suit today in New York State Supreme Court against Smart Apartments, a large-scale operator of short-term rentals in more than 50 buildings in Manhattan and Brooklyn. The suit is the first ever brought by the city for deceptive trade practices against tourists, a representative for the Mayor’s office said.

The suit focuses on Smart Apartments’ alleged practice of booking and housing visitors in illegally-converted apartment buildings, a statement from the Mayor’s office said. The city is seeking $1 million in punitive damages and restitution for the affected tourists, among other damages.

The city has received a restraining order barring Smart Apartments from advertising or operating in New York City.

The city’s Office of Special Enforcement, which conducted a year-long investigation into Smart Apartments’ accommodations, was tipped off by 311 calls and other complaints, the statement said.

In May of 2011 a state bill that “clarified ambiguities,” in the law regarding short-term rentals and hotels went into effect, the statement said. The law deemed residence in an apartment intended for long-term occupancy for fewer than 30 days “transient occupancy.”

Smart Apartments did not immediately return a call requesting comment.

As The Real Deal has reported, the number of violations issued against residential landlords who illegally house temporary occupants more than doubled in the year after the law took effect.

“Illegal hotel operators create hazardous conditions and place the lives of guests in danger,” Mayor Bloomberg said in a statement. “With this lawsuit, we are sending a clear message to operators of all illegal hotels: our Administration will remain vigilant in its commitment to combating this public safety problem.”

However, as The Real Deal has noted, the demand for short-term rentals in Manhattan and Brooklyn has never been higher [Mayor’s Office].  –-Guelda Voien