Office of Special Enforcement Sues to Stop Displacement of Rent-Stabilized Units in Four East Village Buildings

December 16, 2019

Landlord allowed illegal short-term rentals and other conversions in half of the buildings’ units while reporting the loss of 13 rent-stabilized units.

At least nine of the remaining stabilized units have been used for illegal occupancy.

NEW YORK—The Mayor’s Office of Special Enforcement (OSE) filed a complaint on Monday in New York State Supreme Court against 10 individuals and entities, seeking to bring a halt to the illegal short-term rentals and conversions into sub-units at four East Village apartment buildings.

Over the course of its investigation into the four walk-up buildings owned by members of the Sassouni family, OSE determined that illegal short-term rental operators accepted more than 2,700 separate reservations for illegal short-term rentals via online Airbnb. OSE also found that the owners reported the loss of at least 13 rent-stabilized units within its portfolio, and that nine of the remaining stabilized units have been used for illegal occupancy.

While the rental operators profited more than $2.2 million within three years, the Sassouni family accrued more than 230 unresolved HPD violations for vermin, mold, leaks, lead paint, defective windows, and broken doors that have been issued against the four buildings.

“At a time when New Yorkers struggle to find safe and affordable housing, we continue to see how online platforms enable illegal operators to profit off of the communities, which are left to suffer the consequences of these operators’ actions,” said Christian Klossner, Executive Director of the Mayor’s Office of Special Enforcement. “OSE remains steadfastly committed to holding accountable those who would dodge their responsibilities and take advantage of New Yorkers.”

“Landlords who harass their tenants by allowing illegal occupancy are on notice that the City will take action to hold them accountable using every tool at its disposal,” said Jackie Bray, Director of the Mayor's Office to Protect Tenants.

“I applaud the work of the Mayor’s Office of Special Enforcement to hold accountable illegal hotel operators who put profit over people,” said Corporation Counsel James E. Johnson. “The Law Department will continue its work with OSE to pursue violators who undermine our housing laws and the common good.”

Despite a vacancy rate of as low as 3 percent in the East Village, OSE found through its investigation that members of the Sassouni family were reporting a large number of vacant units to the Department of Housing and Community Renewal at the three rent-stabilized buildings in their portfolio, with one of the buildings reporting a vacancy rate as high as 60 percent.

However, investigators determined that some of the allegedly vacant apartments were being rented by operator SoHo Lofts NYC LLC, who paid between $2,400 and $3,300 in monthly rent, or, on average, 50 percent more than the median rent paid by the last rent-stabilized resident.

Inspectors also found SoHo Lofts illegally converted 11 units in the four buildings into multiple illegal and dangerous sub-units, advertising them as rentals “in Manhattan’s most desirable neighborhoods.” SoHo Lofts’ unlawful conversions of the units are so hazardous as to result in partial vacate orders.

Meanwhile, a second operator identified as Lina Torres directly and indirectly managed multiple accounts with different names on the Airbnb platform to illegally advertise apartments in buildings owned by the Sassouni family. The accounts managed by Torres, a licensed real estate salesperson, generated more than $1.6 million in revenue over three years.

Click here for a copy of the City’s complaint.

“The 27th Senate District contains more illegal hotel units on Airbnb than any other district in New York State,” said State Senator Brad Hoylman. “It’s one important factor in the affordability crisis we’re seeing in New York City. In fact, according to a recent report from Comptroller Scott Stringer, Airbnb has led to rents skyrocketing by more than 20% in many areas of our city. The Office of Special Enforcement is doing important work to crack down on illegal hotels, and I’m pleased to see they’ve caught even more bad actors operating in the 27th Senate District.”

“I applaud the Mayor's Office of Special Enforcement for their work in fighting tenant harassment through illegal short-term rentals. These owners are taking dozens of regulated units off the market for their own profit at the detriment of the safety of their tenants. I hope this lawsuit can serve as an example to other landlords who are cashing in on illegally using units as hotels. I look forward to working with the Mayor's Office in safeguarding NYC housing and brining dozens of rent stabilized units back on the market,” said Assembly Member Harvey Epstein.

“It is clear from today’s lawsuit that not only are short-term rentals a serious threat to our city’s housing stock, but they are also starving our incredibly limited supply of rent-regulated housing as well. The warehousing of these apartments in my District for years meant that families without access to stabilized housing had to look elsewhere, while the buildings’ operators and short-term rental platforms illegally profited. I want to thank the Office of Special Enforcement for filing this lawsuit today and hope that with stronger reporting powers, they will be able to expand their mission to protect our city’s housing,” said City Council Member Carlina Rivera.

“Illegal hotels create dangerous living conditions in our communities, and exacerbate the city’s housing affordability crisis. They have no place in New York, and I applaud strong enforcement efforts like this lawsuit to help curtail these harmful business practices. I thank the Mayor's Office of Special Enforcement for their work on this case,” said City Council Speaker Corey Johnson.

“Enforcing tenant laws is just as important as passing them, and that’s what the Office of Special Enforcement is doing once again today,” said Manhattan Borough President Gale A. Brewer. “They deserve the thanks of all those who care about tenant protection.”

“These illegal short-term rentals are perfect examples of the problem that continues to plague our city,” said State Senator Liz Krueger. “Commercial operators are raking in millions of dollars on Airbnb and other platforms while taking units off the market that should be homes for regular New Yorkers. Meanwhile these landlords are failing to maintain the apartments of their actual tenants. I thank OSE for continuing to pursue these important cases.”

“Short-term rentals decrease an already limited housing stock, raising rents and putting long-term tenants at risk,” said Assembly Member Steven Cymbrowitz, Chair of the Assembly’s Housing Committee. “Thanks to the Mayor for his continued commitment to preserving affordable housing for hardworking families and individuals in our City.”

“I applaud the Office of Special Enforcement for taking action to address serious infractions by landlords and building owners, and those in the real estate industry whose nefarious use of Airbnb undermines the stability of the long-term housing market,” said Assembly Member Deborah J. Glick. “Instances of harassment and egregious conduct by landlords are unacceptable, and I stand with OSE as they pursue legal action to ensure that future tenants will be protected from such practices.”

“The action taken today by Mayor de Blasio’s Office of Special Enforcement serves as another strong deterrent to would-be profiteers seeking to rent residential apartments illegally as hotel rooms,” said Assembly Member Richard N. Gottfried, Assembly sponsor of the 2010 State law on illegal hotels. “With this lawsuit, the Office of Special Enforcement is again reminding landlords: illegal hotel operators deprive New Yorkers of desperately needed affordable housing, endanger public safety, and reduce tax revenue, and they will face severe consequences for breaking the law.”

“With each new lawsuit, the Office of Special Enforcement proves what we have been saying all along: Airbnb cannot and should not be trusted to police itself,” said Assembly Member Linda B. Rosenthal. “For years, we have asked Airbnb to at the very least remove commercial listings from its site because of the impacts that these listings have on our communities and our affordable housing. I applaud OSE's relentless pursuit of illegal hotel operators, and will continue to provide the agency with whatever support it needs to do its job effectively.” 

“As tens of thousands of New Yorkers sleep in homeless shelters, the City continues to uncover individuals and business entities who are reaping millions by engineering illegal hotel stays in apartments that are supposed to be homes. The lawsuit filed today by the Office of Special Enforcement is another powerful example of their precedent-setting efforts to rid our city of these illegal – and unregulated – hotels. I want to thank Mayor de Blasio and Executive Director Klossner for staying with the fight to protect our housing stock from illegal conversion – of profound importance as New York City continues to undergo an affordable housing crisis,” said City Council Member Helen Rosenthal.

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About the Mayor's Office of Special Enforcement (OSE)
The Mayor's Office of Special Enforcement (OSE) promotes public safety, community, livability, housing affordability, and other issues concerning those who live in or visit New York City. The multi-agency team provides innovative, solutions-oriented enforcement against harmful illegal industries and activities that one agency alone cannot address. Our dedicated and highly qualified law enforcement professionals, inspectors, investigators, and attorneys promote public safety through enforcement and by proactively fostering community relationships through educational outreach. For more information, visit www.nyc.gov/ose