NYC Airbnb crackdown heats up: First property manager sues the short-term-rental giant under new rules

• A property manager is suing their tenant for listing a rental on Airbnb citing the city's new rules.
• The manager secured a temporary restraining order against the tenant and Airbnb.

New York City's new short-term-rental regulations are being put to the test, raising the question of whose job it is to enforce the crackdown.

On September 5, the city started enforcing licenses for short-term-rental hosts, banned whole-home rentals, and limited guests to two per reservation. New York City listings dropped a staggering 77%, from an estimated 20,000 in June to just 4,600 in September, according to analytics site AirDNA, though it remains unclear how effective enforcement will be.

Now, an Upper West Side property manager has filed a lawsuit against their tenant advertising on Airbnb and the platform itself, in a move that could have ripple effects across the country as other cities use licenses to regulate short-term rentals.

The lawsuit, reviewed by Insider and filed in New York County court on behalf of Canvas Property Group, alleges the tenant violated her lease by hosting a short-term rental in a building that explicitly banned them in the lease. The city's new rules deny licenses if a building already prohibits them.

Canvas Property Group is seeking unspecified monetary damages from not only the tenant, but also the short-term-rental giant. They've already successfully secured a temporary restraining order to have the listing taken down.

Airbnb declined to comment.

Michael A. Pensabene of Rosenberg & Estis, P.C., who's representing Canvas Property Group, told Insider the case tests the real-world consequences of the city's new regulations, becoming the first case to "compel compliance" for hosts and operators.

"Landlords are really put in a position where they have to enforce the law themselves," he told Insider.

But the property manager also blames Airbnb for letting the rental advertise on the platform in the first place. As long as the platform allows unlicensed rentals, the lawsuit reads, "the safety and well-being of other lawful occupants" of the building will be "threatened and jeopardized."

Pensabene believes that platforms, not just the tenants, need to be held accountable for letting unlawful listings stay active.

"All roads lead back to Airbnb," he told Insider. "The only way to end this conduct or to regulate it is to have some form of regulation that affects Airbnb."

Licenses are a popular tool for regulations, as cities from Memphis to Montreal crack down on short-term rentals. In Philadelphia, a new licensing requirement threatened nearly 85% of the city's short-term-rental stock. But just exactly how effective these measures are and who's responsible for their enforcement remains to be seen.

Airbnb has already expressed its disappointment in the current prospects of New York City's market. CEO Brian Chesky, speaking at industry event Skift Global Forum last month, said that New York was the "majority of their business" 14 years ago. He was saddened that the Big Apple didn't allow less-stringent measures, like Paris, which lets owners rent out their entire apartments for 120 days per year.

New York City is "no longer leading the way. It's probably a cautionary tale," he told the audience.