Travel law: Tenant profiteering and Airbnb

Travel law: Tenant profiteering and Airbnb

In this week’s article, we discuss the case Goldstein v. Lipetz, 2017 N.Y. App. Div. LEXIS 4006 (1st Dept. 2017) in which the New York State Appellate Division, First Department in a 3-2 decision found that defendant tenant sublet her rent-stabilized apartment through Airbnb’s website for 338 days during an 18-month period to 93 different customers charging nightly rates of $95 (single) to $120 (double) “far in excess of her stabilized rent equivalent to $57.50 per day”. Although the Rent Stabilization Code (RSC) (9 NYCRR) 2525.6(b) allows the tenant to charge a 10% premium “for an otherwise lawful sublet” the Court found that defendant charged her “roommates” from one and half times to twice the “lawful rent”.

Terror Targets Update

London, England

In Magra & Chan, Van Hits Pedestrians Near a Mosque in London, Killing One, (6/18/2017) it was noted that “A van drove into a group of pedestrians early Monday near a mosque in London, killing one person and injuring to in what the mayor called a ‘horrific terrorist attack’ that struck Muslims as they finished prayers”.

In Scott, After Terror Attacks, Britain Moves to Police the Web, (6/19/2017 it was noted “After deadly terrorist attacks and a nationwide election, Britain is once again focusing on a controversial plan: to regulate the internet. Lawmakers from across the political spectrum are promoting some of the widest-ranging plans anywhere in the western world to rein in the like of Google, Facebook and Twitter, setting up a likely standoff”.

Paris, France

In Paris police: Champs-Elysees attacked killed, firearms and explosives fund in car, (6/19/2017) it was noted that “France’s interior minister has said that a driver who rammed a car into police in an ‘attempted attack’ on security forces on the Champs-Elysees was carrying a ‘number of firearms and explosives’”.

In Paris attacker was on terrorist watch list, had gun permit, (6/20/2017) it was noted that “The man who rammed a car into police in Paris had a gun permit, despite being on a terrorist watch list over suspected jihadist links”.

Yangon, Myanmar

In Three killed at suspected Rohingya insurgent camp in Myanmar, (6/22/2017) it was noted that Myanmar security forced have killed three people in raids on ‘terrorist’ training camps run by Rohingya Muslin militants in the north of Rakhine state…Guns, ammunition and gunpowder were found at the camps in the Mayu Mountains”.

Brussels, Belgium

In Police shoot attacked following blast at Belgium train station, (6/20/2017) it was noted “Belgian police have ‘neutralized’ a suspect after an explosion rocked Brussel’s central train station”.

Bamako, Mali

In Two dead in attack on Mali tourist resort, hostages freed, (6/18/2017) it was noted that

“Special force troops freed around 20 hostages seized by the gunmen…Bamako: Two people were killed in a terror on a tourist resort”.

Stuttgart, Germany

In Two men detained in Stuttgart airport after bomb scare (6/18/2017) it was noted that “Two unidentified men have been detained at Stuttgart airport over an alleged terrorist threat…All flights were temporarily canceled”.

Mogadishu, Somalia

In Al-Shababb car bomb kills up to 10, injures 20 outside govt building in Mogadishu, (6/20/2017) it was noted that “Al-Shabaab militants claimed responsibility for a massive suicide bomb attack at a government building in Mogadishu Tuesday that killed up to 10 people”.

Goodbye Travis Kalanick, We’ll Miss You

In Isaac, Uber Founder Travis Kalanick Resigns as C.E.O., (6/21/2017) it was noted that “Mr. Kalanick’s exit came under pressure after hours of drama involving Uber’s investors (five of which) demanded that the chief executive resign immediately…The company has been exposed this year as having a workplace culture that included sexual harassment and discrimination and it has pushed the envelope in dealing with law enforcement and even partners. That tone was set by Mr. Kalanick, who has aggressively turned the company into the world’s dominant ride-hailing service and upended the transportation industry around the globe”.

Arianna Huffington, Uber’s Next Leader?

In Benner & Isaac, As Uber Leaders Step Aside, Arianna Huffington’s Influence Grows, (6/17/2017) it was noted that “Ms. Huffington’s influence at Uber is growing while the company is dealing with a vacuum of leadership”. In the 14 months since she joined the board, Ms. Huffington has acted the public voice addressing the company’s workplace scandals, talked to employees and helped woo executives. She has also become one of the closest confidantes to Travis Kalanick”.

United Airlines: There You Go Again

In Federal Aviation Administration Press Release-FAA Proposed $35,000 Civil Penalty Against United Airlines (5/30/2017) it was noted that “The (FAA) proposes a $435,000 civil penalty against United Airlines for allegedly operating an aircraft that was not in an airworthy condition. The FAA alleges that on June 9, 2014, United mechanics replaced a fuel pump pressure switch on a Boeing 787 in response to a problem that a flight crew had documented two days before. However, the airline failed to perform a required inspection of the work before returning the aircraft to service, the agency alleges. United operated the aircraft on 23 domestic and international passenger flights before performing the required inspection on June 28, 2014, the FAA alleges. Two of those flights allegedly occurred after the FAA had notified United that it had not performed he inspection”.

No Bushmeat, Please

In Bushmeat hunting threatens tourism in Botswana’s Okavango Delta, (5/29/2017) it was noted that “Botswana is not normally associated with high levels of poaching, however the report finds that illegal bushmeat hunting is occurring as such a significant scale in the Delta that ‘the large quantities of bushmeat reported by some hunters suggests the existence of an organized commercial element to the industry, with capacity to harvest, transport and dispose of significant volumes’. Approximately, 1,800 illegal hunters are estimated to be each harvesting 320kg of bushmeat annually”.

Wear Your Helmet, Please

In Denney, NYC, Citibike Settle With Brain-Injured Cyclist in Run-Up to Trial, (5/22/2017) it was noted that “Just as the case was set to go to trial, New York City and Citibike have settled a negligence lawsuit against the city government and the bike-sharing service filed by a cyclist who was not wearing a helmet and who suffered brain damage in an accident. The plaintiff in the case claimed $60 million in damages. The case was settled on confidential terms under an agreement reached on May 16″.

Oh! Canada: Dueling And Witchcraft

In Dueling and Witchcraft to be legalized in Canada, (6/9/2017) it was noted that “Challenging someone to a duel or practicing witchcraft will no longer be considered a criminal offence in Canada, thanks to a new bill which seeks to update the country’s outdated Criminal Code”.

Hotels Sue Expedia

In Hanson, Hotels Consolidate in Expedia ‘Bait And Switch’ Suit, (5/8/2017) it was noted that “A group of hotels consolidated their suit against several Expedia, Inc. Ravel-booking websites…in California federal court., reasserting their claim that the sites lure in consumers with false advertisements and then divert them to reservations at hotels where they get a cut of the booking. The proposed class action now includes California-based Buckeye Tree Lodge and Sequoia Village Inn LLC and The Mansion on O Street in Washington, D.C., slams Expedia’s sites for allegedly running ‘a classic bait and switch marketing scheme’ worldwide that offers rooms at hotels unaffiliated with the sites or at affiliated hotels where there are no more vacancies in Expedia’s allotment of rooms”.

Hotels Exploit Immigrant Women

In Griffe, NY Hotel Cos. Exploit Immigrant Women Suit Says, (6/8/2017) it was noted that “A Manhattan staffing service and a collection pf property management companies should be held liable for underpaying, overworking and coercing recently arrived immigrant women living in the country, without legal permission employed as hotel concierge workers, according to a complaint filed on Wednesday in federal court…)it is alleged) that) immigrant women are paid about $5 an hour for their work, according to the proposed class action complaint. They are threatened with blackmail if they push back against the tough conditions, the suit alleges”.

Mackinac Island Needs Workers

In Jordan, Visa Shortage Spurs Vacancies, for Jobs, at a Tourist Getaway, (6/8/2017) it was noted that “Mackinac Island has a permanent population of about 500 people and just as many houses, but no cars. From May to October, the picturesque Michigan getaway relies on about 3,000 workers to power it economic engine: summer tourism. Historically, up to a third of those workers are foreigners, including Mexicans, Filipinos, Canadians and Jamaicans, who are hired on seasonal visas. But when many of the island’s business owners applied for those visas this year, they heard from the government that none were left. So, at the Iroquois Hotel, a Victorian property on the waterfront where rooms up to $1,200 a night, the owner is trying to figure out how to maintain its high standards without 30 Jamaican housekeepers…The island selling point is being stuck in time is now suffering because it is stuck in the middle of a modern-day struggle over jobs and who should be doing them”.

Drones On Parade

In Grimes, Drones Kill, Yes, but they Also Rescue, Research and Entertain, (5/11/2017) it was noted that “Named for the buzzing sound it made in flight, and manufactured in the thousands during World War II, it served as a remote-controlled target for gunners. The real thing on loan from the National Models Aviation Museum hangs overhead, an ideal Intrepid-based starting point for ‘Drones: Is The Sky the Limit?’, a wide-ranging, fascinating exhibition at the former aircraft carrier, now the Intrepid Sea, Air & Space Museum. The show is timely. It seems as if each day’s news brings reports of a military drone attack, or developments in Amazon’s plan to set a drone-delivery system for small packages. The future is now, drone-wise”.

How To Use A Hotel Concierge

In Vora, How to Best Use Your Hotel Concierge, (5/23/2017) it was noted that “A hotel’s concierge staff can help you fulfill a range of requests to make your trip that much better, but its services are often underused and sometimes misused, said Kenneth Abisror, the head concierge at Mandarin Oriental New York in New York City. Concierges are a valuable resource, he said, and there are several ways for guests to get the most out of what concierges can offer. Here, Mr. Abisror offers his top tips on how to do that”. (1) Ask them for almost anything., (2) Reach out before you arrive. (3) Don’t ask unless you are sure. (4) There is no absolute ‘best’. “Guests commonly ask their concierge for ‘the best’, but in reality, Mr. Abisror said that there may be several that earn the distinction’”.

Stay Out Of The Cockpit, Please

In Pakistani airline pilot hosts young Chinese woman in cockpit for 2 hours, (5/11/2017) it was noted that “An unauthorized Chinese woman spent two hours in the cockpit of a Beijing-bound Pakistan International Airlines flight from Tokyo. The company, however, claimed that a single passenger there at the pilot’s invitation didn’t pose a security threat”.

Don’t Overstay Your Visit, Please

In Australian visitor spends 2 weeks in jail after overstaying US Visa by 90 minutes, (5/12/2017) it noted that “An Australian man has finally been released from a US prison, two weeks after he was detained at the border for violation of his visa mandate by 90 minutes”.

Renting Out Your Car?

In Lieber, Airbnb Is Popular, but Renting Out Your Car? That’s Another Story, (6/2/2017) it was noted that “On a given holiday weekend, there might be a million people paying to stay in rooms in somebody’s house or putting their whole family up at private homes. Airbnb helps many of those travelers and is now a household name. But personal vehicles, which are also near the top of the list of many people’s most expensive assets, are even more underused than homes. Most people don’t drive more than two hours a day, after all. So why isn’t there a globe-straddling colossus on the tip of our tongues that puts millions of privately owned vehicles into a part-time rental pool? Early in the decade, it looked as though RelayRides might become that company. Since then, however, two people have died in crashes involving vehicles on its rental platform. In New York, the state authorities have effectively evicted the company. And RelayRides has changed its name to Turo, given that it doesn’t offer rides the same way Lyft and Uber do. A competitor called Gataround is also competing for cars and drivers…Never heard of either business?”.

Car Sharing Rentals In Thailand

In Car-sharing rental firm ignites, (5/5/2017) it was noted that “Rent A Car Club, Thailand(‘s) first peer to peer car rental agency, where car owners can rent their cars and make money while doing it…Mr. Serat Varanarn, the company’s managing director, said the car rental business in Thailand is valued at 20 billion baht and grows by 10-20% a year. Running a car rental business requires a huge investment (while) the sharing model forgoes those costs, just as Airbnb avoids many accommodation costs”.

Uber To Repay Drivers

In Scheiber, Uber to Repay Millions to Drivers, Who Could Be Owed Far More, (5/23/2017) it was noted that “Uber said Tuesday that it had made a mistake in the way it calculated its commissions, at a cost of tens of millions of dollars to its New York drivers, and the company vowed to correct the practice and make the drivers whole for the lost earnings. The ride-hailing service said it had been taking its cut from a figure including state taxes, rather than a pretax fare. If a passenger handed over $20 and $2 of that represented taxes, Uber’s commission was a percentage of the full $20, not of $18, as it should have been. Even at pocket change per ride, the cumulative difference was vast…But Uber’s handing of passenger payments raises questions about a larger legal issue, potentially far more substantial: not the pocket-change difference in the commission but whether that entire $2 in taxes is improperly coming out of the drivers’ wallets…Bhaiavi Desai, executive director of the advocacy group, the New York Taxi Workers Alliance, said that ‘from the beginning, Uber built its business model on the assumption that ‘we hate taxes’ and that it had long ‘passed this tax on to drivers’…Other jurisdictions, like Rhode Island and Massachusetts, also levy taxes on fees on ride-hailing services, but it is not clear how Uber collects those taxes”.

Uber’s New Route-Based Pricing

In Newcomer, Uber’s New Pricing Model Tests How Much Riders Will Stomach, Bloomberg, (5/20/2017) it was noted that “Uber drivers have been complaining that the gap between a fare a rider pays and what he driver receives is getting wider. After months of unsatisfying answers, Uber Technologies Inc. is providing an explanation: It’s charging some passengers more because it needs the extra cash. The company detailed for the first time in an interview with Bloomberg a new pricing system that it has been testing for months in certain cities. On Friday, Uber acknowledges to drivers the discrepancy between their compensation and what riders pay. The new fare system is called ‘route-based pricing’ and it charges customers based on what it predicts they’re willing to pay. It’s a break from the past, when Uber calculated fares using a combination of mileage, time and multipliers based on geographic demand…Uber calculates riders’ propensity for paying a higher price for a particular route at a certain time of day. For instance, someone traveling from a wealthy neighborhood to another tony spot might be asked to pay more than another person beading to a poorer part of town, even if demand, traffic and distance are the same…In an attempt to ease drivers’ concerns, Uber will start reporting the price a passenger pays for each ride, though it will stop breaking out the percentage Uber takes of the fare…Route=based pricing is currently limited to 14 U.S. cities where Uber offers its car-pooling service”.

Uber App And Public Transit

In Uber’s new update will now let you look at public transit data while using the app, (5/16/2017) it was noted that “The ride-hailing service announced on Tuesday that its Android app will now allow users to easily access real-time public transportation data. This means customers using Android can better plan trips that require multiple modes of transportation, and say, jump out of an Uber and continue traveling on a bus or train”.

Uber Settles Spam Investigation

In Kennedy, Uber Settles Wash. AG’s Investigation Into Spam Texts, (5/8/2017) it was noted that “Uber will pay $40,000 as part of a deal resolving a Washington state investigation into unsolicited text messages sent by the ride-hailing company…The money is not a civil penalty and will cover the attorney general’s costs associated with investigating the complaints as well any expenses related to monitoring and enforcing the agreement…The complaints started rolling in 2014 from people who were getting texts with information meant for Uber drivers or from drivers themselves, inviting the recipients to drive for the company”.

Uber To Launch Service In Kenya For $1.45

In Freytas-Tamura, Kenya’s Struggling Uber Drivers Fear a New Competitor: Uber, (5/22/2017), it was noted that “Uber in Kenya, already one of the company’s most affordable services in the world, charges customers in Nairobi…a minimum fare of $2.90. Uber is aiming to beat back competing services by pushing its prices even lower. In April (Uber) announced it was introducing an even cheaper service at half the price, $1.45, by allowing its drivers to use much older, lower-quality cars”.

Uber Launches In Myanmar

In Uber chases GrabTaxi, launches in Myanmar, (5/11/2017) it was noted that “The private ride-hailing service Uber officially launched operations Thursday in Myanmar’s main city, Yangon, aiming to tap into one of the world’s youngest and fastest-growing online markets. The launch follows Singapore-based Grab Taxi’s debut, which began a trial run in the Southeast Asian country about six weeks ago”.

Travel Law Case Of The Week

Does Airbnb facilitate some of its hosts to ignore housing statutes and regulations and engage in profiteering? Certainly, New York State’s Attorney General may have concluded as much when after a four year investigation he found in 2014 that 72 percent of Airbnb host units were illegal with commercial operators constituting 6 percent of the hosts and supplying 36 percent of the rentals. And certainly New York State Governor Cuomo may have concluded as much when he signed into law New York Multiple Dwelling Law Section 121 and New York City Administrative Code Section 27-287.1 [the ‘Act’] which imposed substantial penalties for “advertising that promotes the use of dwelling units in a class A multiple dwelling for other than permanent residence purposes” seeking, inter alia, to make Airbnb vicariously liable for the illegal acts of its hosts and similar to legislation in other cities in the United States . Now the courts have weighed in and may have reached the same conclusion in a decision sustaining an eviction of a tenant for “profiteering” and “[t]urning her rent-stabilized apartment into a single-unit tourist hotel (enabling tenant) to earn substantial profits (of) 72%…from her subletting”.

The Goldstein Case

In Goldstein v. Lipetz, 2017 N.Y. App. Div. Lexis 4006 (1st Dept. 2017) the New York State Appellate Division, First Department in a 3-2 decision found that defendant tenant sublet her rent-stabilized apartment through Airbnb’s website for 338 days during an 18 month period to 93 different customers charging nightly rates of $95 (single) to $120 (double) “far in excess of her stabilized rent equivalent to $57.50 per day”. Although the Rent Stabilization Code (RSC) (9 NYCRR) 2525.6(b) allows the tenant to charge a 10% premium “for an otherwise lawful sublet” the Court found that defendant charged her “roommates” from one and half times to twice the “lawful rent”.

Single-Unit Tourist Hotel

Defendant “turned her rent-stabilized apartment into a single-unit tourist hotel” with the facilitation of Airbnb and “realized a 72% profit from her subletting-about seven times the 10% premium permitted for otherwise lawful sublets of furnished rent-stabilized apartments”. The majority rejected defendant’s arguments including that (1) her customers were “roommates” per Real Property Law 235-f and RSC 2525.7 instead of subtenants per RSC 2525.6, (2) her subletting was de minimus, short terms and insubstantial and (3 her landlord had knowledge and gave consent to her subletting. The majority concluded that defendant “exploited the governmentally-conferred privilege of her rent-stabilized tenancy to take financial profits unavailable to her landlord”.

Anti-Airbnb Host Legal Strategies

What can landlords and co-op boards do to stop tenants and co-op owners in New York City from illegally renting to Airbnb guests in addition to terminating a lease based on profiteering. As for cooperatives with restrictions on subletting “The board’s attorney, presented with a listing on Airbnb, can issue a default notice against the shareholder. As additional leverage, if the shareholder has a loan against the apartment the lender will be entitled to notice and opportunity to cure (and he or she doesn’t) the Board may seek an injunction (and) the cooperative’s attorney’s fees”. As for rentals “Of particular importance is whether the violation of an applicable statute is curable by the tenant, simply, by stopping the rental of the apartment to an Airbnb guest”. In Goldstein, the majority found that defendant “is not entitled to an opportunity to cure her breach nor was she entitled to a notice to cure”.

Integrity Of Rent Stabilization

“The integrity of the rent stabilization scheme is obviously undermined if tenants, who themselves are the beneficiaries of regulated rentals are free to sublease their apartments at market levels and thereby collect the profits which are denied the main landlord. The tenant was commercializing with the apartment in a manner which defrauded his landlord as well as the subtenant. This practice, which the Rent Stabilization Law was designed to prevent, is not be to condoned by permitting the tenant to remain after the fraud has been found out.”

The author, Thomas A. Dickerson, is a retired Associate Justice of the Appellate Division, Second Department of the New York State Supreme Court and has been writing about Travel Law for 41 years including his annually updated law books, Travel Law, Law Journal Press (2016), Litigating International Torts in U.S. Courts, Thomson Reuters WestLaw (2016), Class Actions: The Law of 50 States, Law Journal Press (2016) and over 400 legal articles many of which are available at For additional travel law news and developments, especially, in the member states of the EU see

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