A state appellate court has approved the city’s plan to take over a landlord’s properties after he allegedly failed to prevent his tenants from Airbnb-ing their apartments.
In August, Manhattan Supreme Court judge James d’Auguste found Salim Assa, the owner of several Midtown rental buildings, guilty of contempt of court after a two-year-long legal battle with the City of New York, as Commercial Observer previously reported. The city had originally sued Assa in early 2015 for allowing illegal hotel activity to occur in his buildings at 15 West 55th Street and 334 West 46th Street. When New York City Department of Buildings inspectors swung by a couple times in 2016, often accompanied by police officers, they discovered a few more tenants illegally subletting their apartments to travelers on a short-term basis. Those violations became the foundation of the contempt judgement handed down in August, and as punishment, d’Auguste stripped Assa’s legal control over his buildings.
Although Assa’s lawyers asked the appellate court for a stay of enforcement to prevent that process from going forward, the appellate court denied the stay on Monday. However, their appeal against the contempt judgement will go forward in court.
Now the state court will appoint a receiver to manage the two Assa-owned properties at the center of the lawsuit. The receiver, a lawyer named Darren Marks, will operate the two buildings and collect rents. Receivership creates a major financial burden for Assa because it qualifies as an automatic default on the mortgages for those buildings.
“This decision shows that in extreme cases where landlords continuously flout the law and the court order, despite receiving multiple violations and an injunction, the city can and will step in to protect its housing stock for New York families,” Catherine Wan, the deputy director of the Mayor’s Office of Special Enforcement, which pursues anti-Airbnb and illegal hotel cases, said in a statement.
Assa wouldn’t be able to sell either of the properties during the year-long receivership, according to an OSE spokesman.
“We would only clarify that this has absolutely no bearing on the ultimate outcome of this matter,” a spokesman for Assa said in a statement. “We believe we have a strong case that will prevail on the merits, and we’ll move forward in presenting that case.”
Assa is one of several landlords who have been branded the city’s worst violators of anti-Airbnb and hotel laws. Over the past three years, the city has sued a handful of property owners who racked up the most illegal hotel complaints, typically filed by tenants or neighbors. In an effort to crack down on illegal short-term (less than 30 day) rentals in residential buildings, the mayor committed $2.9 million to the Mayor’s Office of Special Enforcement and added 16 staffers to the 32-person agency earlier this year. Although OSE was originally created to tackle issues like drug dealing and prostitution, it now focuses most of its efforts on owners and tenants violating the state’s anti-Airbnb laws.