Mayor's Office Of Special Enforcement Announces $1.2 Million Settlement In Lawsuit Against Short-Term Rental Operators

March 5, 2024

Settlement Holds Operator CorpHousing Group Accountable for Past Conversion of 67 Permanent Housing Units Across 29 Buildings Into Illegal Short-Term Rentals

NEW YORK – The Mayor’s Office of Special Enforcement (OSE) today announced a new lawsuit and pre-negotiated settlement against a former illegal short-term rental operation. The suit alleges that CorpHousing Group and SoBeNY Partners Inc (“the defendants”) operated illegal short-term rentals in 67 permanent residential dwelling units across 29 buildings in Manhattan and Brooklyn, generating more than $3.9 million in payouts for more than 4,300 illegal short-term rentals between March of 2019 and March of 2022.

The city discovered the illegal operation after OSE inspectors conducted complaint-driven field inspections. The inspections revealed various violating conditions, and the city used transaction records obtained from booking platforms under the Booking Service Data Reporting law to identify the scope of operation. Before the city initiated formal action against defendants for the full scale of their operation, the defendants contacted OSE to resolve their liability relating to inspection-based violations and to report they had voluntarily discontinued illegal operations and begun operating in spaces that were legally approved for hotel use. The defendants cooperated fully with OSE’s investigation thereafter, leading to this settlement.

“Preserving housing for New Yorkers is a top priority for our administration, but CorpHousing and SoBeNY were both depriving New Yorkers of precious housing stock,” said New York City Mayor Eric Adams. “We appreciate that both these companies came forward and worked with us to fully comply with the law. Illegal short-term rental operators hurt our hospitality industry and make it harder for New Yorkers to find affordable housing, and we must ensure we are holding them accountable.”

“CorpHousing has reinvented itself as a legal operator, now known as LuxUrban Hotels, renting out rooms that are legally approved as hotel rooms, and has stopped placing guests in illegal rentals that lack basic safety requirements,” said Mayor’s Office of Special Enforcement Executive Director Christian Klossner. “This settlement underscores the benefits of the city’s robust booking service data reporting requirements.”

“Stable and secure housing is a fundamental building block of public safety,” said Mayor’s Office of Criminal Justice Director Deanna Logan. “By enforcing the long-standing laws on short-term rentals, OSE is advancing Mayor Adams’s commitment to equity, and preserving opportunities to obtain long-term and permanent housing for all New Yorkers.”

“I commend everyone at the Mayor’s Office of Special Enforcement and the Law Department who worked to obtain this excellent result,” said New York City Corporation Counsel Sylvia O. Hinds-Radix. “This settlement is another example of the City’s continuing efforts to hold illegal short-term rental operators fully accountable for putting people’s safety at risk and worsening the housing crisis New Yorkers are facing.”

"I am very pleased to see not only a successful enforcement action by OSE, but a company voluntarily coming into compliance and ending their illegal activities,” said Senator Liz Kreuger (D/WF -Manhattan), Finance Committee Chair. Every illegal short-term rental in our city represents a unit of housing that is not available for everyday New Yorkers to live in. I thank OSE for their ongoing efforts to rein in these illegal practices and keep New York's extremely limited housing stock available for New Yorkers."

“I’m pleased that CorpHousing has agreed to come into compliance with city law after operating illegal short-term rentals in 29 buildings across the city, including several on the west side of Manhattan,” said Senator Brad Hoylman-Sigal. The company reached a settlement with the NYC Office of Special Enforcement, securing over one million dollars in penalties, to be returned to New York City. We are in a housing crisis and illegal short-term rentals drive up rents for New Yorkers by removing apartments from the housing market. I hope this settlement sends a clear message to other short term rental landlords about their important role in keeping apartments available to our community.”

"There are no two ways about it: illegal short-term rentals rob our communities of much-needed housing during a statewide affordability crisis,” said Assembly Member Linda B. Rosenthal (D/WF -Manhattan), Chair of the Assembly Committee on Housing. “For far too long, commercial operators have knowingly and illegally depleted the city and state’s greatest resource by prioritizing their profits over affordable homes for New Yorkers. With vacancy rates at an all-time low, it is critical that our agencies use every available tool to wrest back our housing supply from those who defraud and financially fleece hardworking tenants. This settlement is certainly a step in that very direction, and I applaud OSE for its efforts in this groundbreaking case.”

“I am pleased with the settlement reached by the Office of Special Enforcement and CorpHousing,” said Assembly Member Harvey Epstein. “The conversion of permanent housing units into short-term rentals is critically depleting our city’s housing stock. I am glad that CorpHousing is suspending illegal operations and I hope it encourages similar action from other illegally-operating short-term rental owners across the city.”

“Westside Neighborhood Alliance would like to commend Office of Special Enforcement,” said Westside Neighborhood Alliance Illegal Hotels Committee Member Vivian Abuelo. “To see illegal operations closed down and housing units returned to the market was the ultimate goal of our illegal hotels campaign.”

“This settlement testifies to the successful implementation of NYC’s legislation against illegal short-term rentals. Because of this legislation, CorpHousing realized that operating illegal hotels in NYC was a thing of the past,” said Coalition Against Illegal Hotels Member Tom Cayler. “We anticipate similar outcomes as platforms and hosts come to the same conclusion that CorpHousing did: Do Not Take Residential Housing Away from New Yorkers!”

“HCC commends OSE's work targeting illegal short-term rentals and the actors behind them,” says Housing Conservation Coordinators Director of Organizing Charlie Dulik. “Now more than ever, it is critical these types of units serve as homes to New Yorkers, and we look forward to seeing even more return to long-term housing moving forward.”

New York City’s booking service data reporting law requires online short-term rental platforms to periodically provide OSE with information about transactions for certain listings. These reports include the physical address of the short-term rental (as reported to the booking service by the host), the URL of the short-term rental listing, details pertaining to the scope of the short-term rental transaction, and information relating to the identity of the host, including contact information and associated bank accounts to which payouts were made.New York City’s short-term rental registration law requires short-term rental hosts in New York City to register with the city and prevents platforms like Airbnb from processing transactions for unregistered hosts.

The NYC Law Department authorizes and reviews all lawsuits brought by OSE to enforce the city’s laws.

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About the Mayor's Office of Special Enforcement

The Mayor's Office of Special Enforcement (OSE), positioned within the Mayor's Office of Criminal Justice (MOCJ), plays a crucial role in ensuring the safety of city residents by overseeing various illegal and unregulated industries. The office is tasked with enforcing a diverse range of laws and regulations aimed at maintaining a safe and livable environment. The office conducts research on quality-of-life issues, with a focus on areas such as adult use locations, trademark counterfeiting, bazaars, and illegal conversions of apartment buildings into hotels. Additionally, OSE is responsible for the enforcement of laws and regulations on short-term residential rentals and the education of the public on these laws and subsequent enforcement. For more information, visit nyc.gov/ose.

 

Media Contact

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