Airbnb Sues NY State Over NY Law Regulating NYC Rentals

Real Estate In-Depth | October 2016

NEW YORK—Shortly after Gov. Andrew Cuomo signed legislation that would impose fines of up to $7,500 on hosts of rental housing portal Airbnb that break state and local housing regulations, Airbnb filed a federal lawsuit on Friday Oct. 21 to overturn the legislation.

New York State Governor Andrew Cuomo
Governor Andrew Cuomo

According to a report in the New York Times, Airbnb contends in the federal court filing that the new state law signed by Gov. Cuomo on Friday would cause it “irreparable harm.” New York City is Airbnb’s largest market. The site is currently battling similar legislation passed in San Francisco and Santa Monica, CA.

New York State is looking to regulate against property owners that seek to circumvent housing regulations and rent out apartment units for short-term travelers and take the units off the market for full-time renters, which drive housing costs higher, the New York Times reports.

In its federal lawsuit, Airbnb charges that the new law violates the company’s constitutional rights to free speech and due process, as well as protections under the Communications Decency Act, a federal law that states websites cannot be held accountable for content published by their users.

 New York State Attorney General Eric Schneiderman
Attorney General Eric Schneiderman

Airbnb also named New York State Attorney General Eric Schneiderman and New York City Mayor Bill de Blasio in its court case. Schneiderman said in a prepared statement: “The law signed today will provide vital protections for New York tenants and help prevent the continued proliferation of illegal, unregulated hotels, and we will defend it. Airbnb can’t have it both ways: it must either police illegal activity on its own site—or government will act to protect New Yorkers, as the state just did.”

John Banks III, president of the Real Estate Board of New York (REBNY) stated, “This legislation is an important step toward stopping illegal behavior that takes precious housing units off the market, threatens hotel workers’ jobs and hurts the quality of life for residents in our city’s multifamily buildings. We would like to thank the Governor as well as the members of the State Senate and Assembly for addressing this critical issue.”