DOB, ECB Adopt New Penalties for Illegal Residential Unit Conversions

On Feb. 27, 2013, Final Rules were published for Local Law 45 of 2012, which Mayor Bloomberg signed into law on Oct. 2, 2012. Local Law 45 emerged from the findings of a growing trend among New Yorkers to market rooms within residential apartment buildings for short-term use.

This trend came hand in hand with the rise of various Web services such as Airbnb.com, which offer a marketplace for such rental properties. Opponents of these illegal conversions said they contribute to an already extremely low rental vacancy rate across the city and create significant health and safety concerns for legal permanent residents.

Specifically, Local Law 45 makes it illegal to use, occupy, convert, offer, or permit the use of a permanent residential apartment space for other than permanent residence purposes. Such illegal uses include (but are not limited to) converting a permanent residence into a short-stay hotel room. According to the rule, such an illegal conversion becomes a Class 2 major violation for the first violation. Subsequent violations, or illegal conversions that involve more than one residential unit by the same person at the same unit or multiple dwelling, are classified as immediately hazardous (Class 1) violations.

The steep penalties start at $3,200 for Class 1 and $1,600 for Class 2 violations. In addition to the Class 1 and Class 2 violation designations, the rule also adds a daily penalty for Class 1 violations. The additional and separate civil penalties for Class 1 violations that may be imposed for each continued and uncorrected Class 1 violation include a $45,000 default penalty and a daily penalty of $1,000 per day for continued violations above the flat penalty.