To post, or Not to Post;Cuomo Threatens Airbnb with New Bill to Pass in New York

by Jack Dayon, J.D. Class of 2017 Touro Law Review Senior Staff Member

Over the last several years, Airbnb has posted its mark on the short and even long-term residential rental game for people all across the globe.[1] By making it highly accessible and more affordable than almost any other alternative, Airbnb has left its competitors in the dust by dominating the residential renting market and has recently posted a $30 billion valuation.[2]

Governor Cuomo has until January to decide on a bill that if passed, will make a significant chunk of Airbnb’s business illegal.[3] The bill is set to prohibit any building with three or more units in New York City from being rented out for less than thirty days.[4] If violated, owners of the apartments listed on Airbnb’s cite will be heavily fined. For a first offense the owner who posts the listing will be fined anywhere up to $1,000.00.[5] For a second violation the fine would be $5,000.00, and for a third and subsequent violations the fine would be $7,500.00.[6]

The main advocacy for the bills passing comes from affordable housing activist who believe that the growth of services like Airbnb, will divert units out of the regular housing stock.[7] Other advocates include hotels and motels, whose primary business is to provide a luxury short-term stay for guests traveling in the area. Airbnb and other providers are doing what hotels and motels do by accommodating guests for their short-term stay experience, but without the burdensome formalities that come with staying at a hotel or motel.

The Travel Technology Association (Travel Tech), an advocacy group whose members include Airbnb, HomeAway, Expedia, and other online travel intermediaries, said in a statement that the new law “possibly infringes upon free speech and threatens to undermine the legal foundation upon which Internet providers and platforms rely for protection.”[8] Matthew Kiessling, head of Travel Tech’s short-term rental policy department, told Skift, “[f]or us, this law is concerning because it’s issuing massive punitive penalties for anybody who’s caught listing, not even renting. That’s one of the things that’s sort of key. If you’re caught advertising, it’s a really steep fine.”[9]

Representatives at Skift spoke with Eric Goldman, a professor at Santa Clara University School of Law and an expert on legal issues relating to websites. Goldman said that as long as the law makes a clear distinction between the advertisers (hosts) and the publishers (Airbnb, HomeAway, etc.) it should be enforceable. However, he said, “[i]f the law is interpreted to apply to publishers, in addition to the advertiser, it runs into several legal doctrines which limit is scope. I couldn’t see any language that holds the publishers liable.”[10]

The bill as it stands, contains a legal hole in its language because it can be interpreted as infringing on an owner’s first amendment right to advertise their home or apartment on such various cites. While this is true, the sole purpose an owner has in listing their apartment/home on Airbnb’s cite would be to match with a potential renter, subsequently completing the “landlord tenant” transaction. Thus, the fine that would be administered would be a result of the completion of the transaction and not the advertisement itself. Like professor Goldman said, as long as the bill makes it clear that the act warranting the penalty is the act of renting the apartment and not listing an apartment on the providers website, the bill should face no legal insecurities.

Airbnb’s general counsel, Rob Chesnut, in a recent letter sent to Governor Cuomo and legislative leaders, called the bill “not only unwise, but also unconstitutional.”[11] Chesnut then continued to say that if Governor Cuomo goes ahead and signs this bill in question “Airbnb would have no choice but to immediately file suit against the State of New York and ask a court to declare the statute invalid and unenforceable as well as to award any damages and fees as appropriate.”[12] Airbnb relies on the argument that the bill, as written, violates federal law by not differentiating between hosts who list their properties for short-term rentals and the platform that carries the listing.[13]

Putting the legal arguments aside, Chesnut pleads that the bill is bad for New Yorkers. He stated, “the overwhelming majority of those engaged in home sharing in New York City are middle class New Yorkers looking to use the income to help make ends meet.”[14] By imposing fines of up to $7,500 per violation, Chesnut says the bill fails to distinguish between individuals who occasionally share their home and commercial operators who Cuomo is truly targeting. The fines, he wrote, would be higher than those for drunken driving or misdemeanor assault and “would be incredibly harmful to everyday New Yorkers struggling to make ends meet while doing little to deter commercial operators who have access to capital investments.”[15]

Chesnut has voiced that Airbnb has and will continue to support efforts to protect permanent housing by discouraging commercial operators from using their platform. In fact, Airbnb has already removed 2,579 city listings from the site that they believed posed the risk of taking permanent housing off the market.[16] Governor Cuomo has showed his hand in regards to the new bill, it now looks like Airbnb is doing just the same.

[1] Airbnb, https://www.airbnb.com/ (last visited Sept. 8, 2016).

[2]  New York Short-Term Rental Bill Anti-Technology, Disregards Needs of Residents and Travelers, Travel Tech (June 17. 2016), http://www.traveltech.org/2668-2/.

[3] Senate Bill S6340A, The New York State Senate https://www.nysenate.gov/legislation/bills/2015/s6340/ amendment/a (last visited Sept. 8, 2016).

[4] Id.

[5] Id.

[6] Id.

[7] New York bill Would Ban Airbnb Listings for Some Short-Term Rentals, Reuters (June 20, 2016), http://www.reuters.com/article/us-new-york-airbnb-idUSKCN0Z62M2.

[8] Travel Tech, supra note 2.

[9] Travel Tech, supra note 2.

[10] Travel Tech, supra note 2.

[11] Airbnb threatens to sue if Gov. Cuomo signs bill barring ads for ‘illegal’ housing units, Daily News, (Sept. 7, 2016),  http://www.nydailynews.com/news/politics/airbnb-threatens-suit-cuomo-signs-bill-restricting-ads-article-1.2780547.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] Daily News, supra note 11.

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