New York – NYC Files $21M Suit Against Brokerage Firm For Illegal Airbnb Listings

New York – The Mayor’s Office of Special Enforcement is bringing a lawsuit against Manhattan real estate brokerage firm, Metropolitan Property Group (MPG), five current and former MPG employees, and 18 corporate entities affiliated with these employees for turning at least 130 apartments across 35 residential buildings, including one entire building in East Harlem, into illegal short-term rentals primarily through Airbnb.

“Illegal hotels take precious housing away from New Yorkers and destabilize our communities. My administration is cracking down on corporate operators to ensure residents and visitors are safe and are treated fairly,” said Mayor de Blasio.

“Over and over again, well-meaning visitors are being misled by sophisticated businesspeople into booking illegal rentals. Only with better data and cooperation from the booking websites can we efficiently identify and shut down these operations. Our top priority is preserving housing and a sense of community in New York neighborhoods, and we want guests to feel safe when they visit our city,” says Christian Klossner, Executive Director of the Mayor’s Office of Special Enforcement.

MPG and their employees advertised short-term rentals on Airbnb through approximately 250 listings via approximately 101 host accounts using various fake identities. Nearly 70 percent of locations advertised omitted the house number for the rental location. The platforms’ data shows the same contact information was often used to set up the distinct host accounts.

Users who advertise housing for rent on booking platforms were allowed to use fake identities, create multiple host accounts, and omit location information, obstructing enforcement as well as consumers’ ability to receive complete information and track reviews. In response to community complaints, OSE conducted inspections and issued violations in five buildings named in the lawsuit. OSE then utilized data obtained from the platforms via administrative subpoena to connect illegal activity to the ring of real estate professionals.

OSE was also able to determine the 18 entities affiliated with MPG and its employees received at least $20.7 million in short-term rental revenue through Airbnb alone from 2015 to 2018. MPG employees conducted 13,691 short-term rental transactions, involving over 75,000 guests who were not notified of the illegality of the rentals nor the lack of safety measures. Revenue from almost 3,000 short-term rental transactions were made payable to MPG’s headquarters.

OSE identified at least 138 listings on Airbnb advertising short-term rentals within the five Subject Buildings, located at 200 East 116th Street in East Harlem, which has entirely been converted to short-term rentals, 123 East 54th Street in Midtown East, 207-215 East 27th Street, 230 East 30th Street and 2118 3rd Avenue in Kips Bay. OSE estimates MPG has advertised and maintained short-term rentals in 30 other buildings in Manhattan since 2014.

Based on data the booking platforms make publicly available, there are approximately 60,000 listings on the top five platforms for vacation rentals. OSE estimates 33 percent of listings are commercial listings.

The complaint filed in court today can be found here.

When contacted by the NY Times, Sami Katri, the CEO of Metropolitan Property Group said the allegations were not true and refused to comment any further.