New York City recently scored two big wins in its long and high-profile battle against illegal hotels operating in the City, securing a $1.2 million settlement from real estate owner Salim “Solly” Assa, and a separate $1 million settlement with landlords Majid and Hamid Kermanshah. All three had been accused of listing apartments in the buildings they owned as short-term rentals, operating de facto commercial hotels out of the buildings.
The case of Assa, who owns four buildings in midtown Manhattan, is also significant for the terms other than the monetary settlement. NYC had taken legal action against Assa following his failure to answer roughly 100 notices of violation, and alleged that he had entered into business partnership with two brothers who would rent out the apartments at his properties. Though Assa denied any knowledge of wrongdoing, he agreed as part of the setttlement that his four buildings would be overseen by the City and an independent property manager for the next three years.
These two settlements are emblematic of NYC’s approach to regulating short-term rentals following its December 2016 settlement of AirBnb lawsuit over NYC’s new short-term rental advertising law. AirBnb had sued to block the law, which imposed fines of up to $7,500 on hosts who advertised illegal short-term rentals on platforms such as AirBnB, out of concerns it would impose criminal liability on third-party platforms like AirBnB. AirBnB agreed to drop the lawsuit after NYC agreed that the law would not be enforced against the company, but only against individual violators. Since then, the mayor’s Office of Special Enforcement has emphasized large-scale commercial enterprises, with these two settlements representing the largest penalties.