Rental Websites In The Hamptons Under Scrutiny of Federal, State, and Local Law Enforcement Agencies

In a recent class I was teaching for realtors, Corcoran agent Bob Cacciola, raised the issue of the rental activities of the online antics of the Internet website, Airbnb. This is the way Bob framed the issue: “In a society of laws meant to protect all citizens, the participants are evading taxes, breaking local and state building codes, and devaluing neighboring properties that lead to the degeneration of a community. The attitude is, ‘well they’re doing it so I’m doing it.’ Homeowners’ insurance companies can’t be aware of owners who partner with Airbnb. The potential for property damage, personal injury, fire, and even death, are too great a risk for them to carry.”

Mala Sander, also a Corcoran agent, shared her views on the subject. “Owners who have been participating in these activities are doing themselves a disservice. Fewer and fewer tenants are looking to rent for the entire Memorial Day to Labor Day season. More and more are looking for the two-week or shorter rental period which works against the landlord’s ability to rent for the season. Also, we, as brokers, are careful about matching qualified tenants with the properties available. Landlords take a risk when they try to do it themselves, to say nothing of having to field all of those phone calls.”

The National Association of Realtors and the United States Department of Housing and Urban Development are also concerned about the ethical and possible Federal Fair Housing violations of Homefacts.com, owned by RealtyTrac, as well Zillow and Trulia. The demographic information provided by these websites could constitute Fair Housing violations.

Another concern is the possible and actual violation of state and local laws that prohibit overcrowding, short-term rentals intended to prevent constant turnover of tenants, and violations of health and safety laws. New York State Attorney General, Eric Schneiderman, has required Airbnb to provide his office with the names of 124 of its hosts (those who have posted their properties for rental on the Airbnb website).

Even before these practices gained widespread attention, in 2007, the Town of Southampton developed a rental permit law, and the Town of East Hampton is proposing a rental registration law intended to address these issues.

East Hampton Assistant Town Attorney, Michael Sendlenski, explained the registration process to Hamptons.com, “A landlord would have to register the residence with the Town’s Buildings Department and receive a rental registration number. They would have to provide an affidavit stating that there is a valid Certificate of Occupancy. It doesn’t change the law which permits rentals of fewer than 15 days every six months. It does not require inspection by Code Enforcement for the registration number to be issued.”

The issue of concern to the National Association of Realtors and the U.S. Department of Housing and Urban Development is that the websites in question provide information about the racial, religious, and ethnic composition of a particular community which would violate Fair Housing laws.

Among the concerns with the activities of the Internet sites like Airbnb and VRBO, is the impact they can have on the community. A residential neighborhood is suddenly confronted with “motel like” houses springing up in their midst which violate health and safety laws, overcrowding, party houses rather than homes, and people descending upon a neighborhood vying for these illegal rentals. It would seem logical to me, that the property owner who is most likely to engage in these activities would be an absentee owner rather than one who resides in the community.

In the final analysis, it is up to the public to decide that these practices are detrimental to their community, and refrain from participation as well as cooperate with local code enforcement authorities.