Short-term rentals in a luxury high-rise — what could go wrong?
Try “nightmarish living conditions” ranging from armed robbery to harassment, according to a lawsuit by two tenants at 20 Broad Street in the Financial District.
In a 54-page complaint filed Monday in New York, the disgruntled tenants at Metroloft Management’s office-to-residential conversion detailed a myriad of grievances that they largely pinned on Sonder, a hospitality startup that occupies the first eight floors.
“Sonder is the worst kind of nightmare neighbor one could imagine,” the complaint said. “It showed up unexpected and uninvited, trashed the place and the neighborhood, and now refuses to leave.”
Founded in 2012, the San Francisco-based company inked a master lease for 169 units at 20 Broad in 2018. Nathan Berman’s Metroloft acquired the leasehold for the building in a 2015 deal valued at $200 million and converted it into 533 luxury apartments. Available rentals include a studio asking $3,500 a month and a two-bedroom asking $5,546, according to StreetEasy.
In the complaint, the tenants claimed neither Metroloft nor a leasing agent from Bold New York told them Sonder operated in the building. Upon moving in, the complaint said, they found “unfinished” conditions including no gas or hot water in the kitchen.
But they alleged the bigger issue was the security threat posed by guests of Sonder, which is valued at more than $1 billion after raising more than $400 million from investors.
“While Sonder is venture-capital backed and has raised several hundred million dollars to date, its business model betrays a total lack of accountability to, or concern for, the communities in which it operates,” the complaint states. “Sonder’s guests cause a disproportionate number of issues, including but not limited to drug use, drug dealing, theft, harassment, armed robbery, and assault, all of which have occurred in the building in just under a year.”
Sonder and Bold declined to comment. Metroloft did not immediately respond to a request for comment. All three were named as defendants by the lawsuit.
Short-term rental companies, including Airbnb, have taken steps to enhance safety. But the homes they offer are generally unattended and lawsuits have been filed by residents unhappy about them being rented out for short-term stays.
In their complaint, the tenants at 20 Broad claimed neither Sonder nor Metroloft did enough to ensure their safety. Citing documents obtained through the Freedom of Information Law, the complaint cited nine police reports associated with the building in 2019.
In November, the complaint said, six armed men walked in the front door, rode the elevator to the ninth floor, crashed a Sonder party and “viciously beat one of the attendees” with a gun before leaving the same way they came.
The incident, which the New York Post reported, stoked fear among residents given that building staff with a special key fob can enter any residence. According to the complaint, building representatives occasionally used their fobs without permission and in some cases entered apartments “when residents were engaged in extremely private and sensitive moments without clothes.”
The complaint further alleged that in February residents were informed that the city’s Department of Health was testing the water below the 12th floor for the bacteria that causes Legionnaires’ disease. Over the next few weeks, as the coronavirus tore through the city and New Yorkers stayed home, building management shut off the water to do plumbing work.
According to the complaint, Sonder’s background checks on guests are insufficient, particularly since 20 Broad is adjacent to the New York Stock Exchange. “Sonder and Management have potentially created a major national security vulnerability,” the suit stated.
The complaint said building management has put tenants at greater risk of Covid-19 by allowing a “revolving door” of new people to enter.