07/24/2024
NYC Airbnb Crackdown: How Mayoral Subpoenas Could Impact You as a Host
Real estate attorney Brandon McKenzie discusses how NYC Airbnb hosts are impacted by mayoral subpoenas.
In April 2024, The Mayor’s Office of Special Enforcement for the City of New York, issued a subpoena to Airbnb seeking certain host records. This is not the first subpoena that the Mayor’s Office has issued for short term rentals, nor will it be the last. In the case of that subpoena, the City sought records from Airbnb dating back to January 9, 2023 through the present, including Airbnb user identities - first name, last name, email address, phone number, hometown, employer, bank accounts designated to receive payments, and even IP addresses used to create, access, modify, or maintain each user identity. The subpoena also sought extensive records about Airbnb listings and reservations. While Airbnb does sometimes notify hosts that their data is being sought by the City via subpoena, in many cases, by the time Airbnb does provide that notification, it may be too late or almost too late for many hosts to take any action to try to block or limit the release of their data by seeking court intervention. Now, when coupled with existing data sharing frameworks that the City already has with Airbnb, these subpoenas can give the City a much clearer picture of whether a host has run an illegal Airbnb operation. Where the City finds indications of illegal activity, the City may also subpoena other entities like a host’s bank, utility provider, and internet service providers - all of which can help to reinforce the City’s findings from Airbnb. In my experience, a host appearing as a target of one of these subpoenas is typically no accident, so I am often surprised that I still receive phone calls from hosts who may say things like, “Maybe I can wait and see. Maybe the City won’t sue me. Maybe I can make a little bit more money on Airbnb until they do to help cover legal fees.” This is all naive thinking, and unfortunately, there are inexperienced attorneys who sometimes reinforce this “wait and see” thinking in hosts.
If the City uncovers illegal Airbnb activity, the City has a number of tools at its disposal. The City can name a host as a defendant in a lawsuit. The City can send out members of its task force to subject properties to issue violations that can carry hefty fines. Or, what I see with more frequency is that the City will issue a subpoena for testimony directly to the host, so they can force the host to come in and testify, under oath, about that host’s entire Airbnb operation - in other words, getting a host to give the City more evidence that the City can use against that host in a lawsuit. Taking a wait and see approach can be downright dangerous.
Fortunately, there’s a silver lining. If a host gets out in front of an investigation - even after a subpoena has issued but before the City has expended time, resources, and expense in litigation, there are easier paths to settlement - a compliance program. So rather than a host getting sued for millions of dollars, a host can voluntarily agree with the City not to engage in further unlawful short-term rental activity and negotiate a settlement payment that may be considerably less than what the City would seek to recover in litigation. Our office has seen and dealt with litigation for short-term rental activity in the millions of dollars, whereas clients who engage in the City's compliance program early on can often settle for a fraction of what the City would seek to recover through litigation. This is an incredibly nuanced area of law, so if you find yourself or your properties identified as the subjects of one of the Mayor’s Office’s subpoenas and decide to seek legal counsel, finding an attorney with experience in those areas can mean the difference between a good settlement and a terrible one.
Brandon McKenzie is an attorney at Moss & Moss LLP, a full-service law firm based in the Flatiron District of Manhattan: https://www.mossandmoss.com/. Brandon and his team offer special expertise in Real Estate Law, Business Law & Commercial Litigation, Divorce & Family Law, General Litigation as well as Estate Planning and Elder Care Law.
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Real estate attorney Brandon McKenzie discusses how NYC Airbnb hosts are impacted by mayoral subpoenas.In April 2024, The Mayor’s Office of Special Enforceme...
