By Gus Saltonstall
A Queens-based real estate firm and one of its brokers were busted by the city for illegally converting permanent housing units into short-term Airbnb rentals, including on the Upper West Side, the New York Department of State and the city’s Mayor’s Office recently announced.
Mega Homes and its broker Katherine Cartagena will have to fork over $845,000 as part of a settlement reached with the city and state over the illegal short-term rentals.
The firm used multiple permanent residential units at 311 East 51st Street and 207 West 75th Street, between Broadway and Amsterdam Avenue, to advertise and operate the illegal rentals, according to court documents.
Records show that between 2019 and 2022, Airbnb paid out more than $2 million to the defendants for more than 550 short-term rentals that over 2,000 guests used at the two buildings.
“New York is in the middle of a housing shortage crisis which makes returning long-term rental units to the housing market crucial,” said Secretary of State Robert J. Rodriguez, in a news release, about the settlement.
Specifically, New York City law requires short-term rental hosts in the five boroughs to register with the city to prevent platforms such as Airbnb from processing transactions unless the registration information matches a city database.
In the case of Mega Homes, its short-term rental setups for the above two addresses were not properly registered with the city, according to documents.
Mega Homes and Cartagena will have until October, 2026 to pay off the $850,000 settlement, and are now prohibited from renting and advertising apartments for periods under 30 days, according to the city.
“Safe, stable, and affordable housing is fundamental to a prosperous city, and with our short-term rental reporting and registration laws we are stopping illegal operators from impeding our housing goals,” Mayor Eric Adams said in a news release. “[The] settlement sends a clear message that we will not allow anyone to use our valuable housing stock for unlawful personal gain.”
You can read more — HERE.
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“New York City law requires short-term rental hosts in the five boroughs to register with the city to prevent platforms such as Airbnb from processing transactions unless the registration information matches a city database.”
It would seem that NYC could use a similar registry to record and document actual leases, in order to avoid the squatter issue.
$845K penalty, but the company made over $2MM over a three-year period. Plus, they have more than two years to pay it. Those economics don’t seem to serve as much of a disincentive against criminal behavior. Little more than a wrist slap.
You may be confusing revenue and profit.
Huh?
845K / 2M? That’s ~ 40% of gross…pretty significant.
Shouldn’t it be 100%? Isn’t the $2M ill gotten gains?
These real estate agents who do this should all be busted. She made 2 million dollars, why does she only have to pay 800K back?
Grosses $2mil is different than net proceeds.
Great reporting, Gus. IMHO, Air B&B has been a BAD dissrupting infuence in general. Out-of-contol behavior in supposedly residential buildings, etc. etc.
Finr wasn’t large enough IMHO.
Are you speaking specifically to NYC? Because AirBNB’s are awesome (outside of the city).
It’s not awesome to live next door to someone who’s Airbnb their home or apartment.
It’s a nightmare when a home is treated like an unregulated hotel and the coming and going of people on vacation.
There’s a brownstone building doing the same thing at 124 West 80th St.
Who do you contact to inform them of the illegal operation?
The Mayor’s Office of Special Enforcement website says you can report illegal short-term rentals via 311 or by using an online form on their page: https://www.nyc.gov/site/specialenforcement/index.page
I agree with the other commenters who ask why they got such a small fine compared with their income from the illegal practice. And, what about the tenants they evicted to participate in the rental scam?
I’d have sought complete confiscation of the income plus additional amounts to compensate those who were evicted for the purpose of the illegal use of the housing in the city
Mayor Adams talks about “Our housing” as if the City owns these properties and personal property rights are trampled over. NYC is heading towards communism in every way possible.
There are what is called government rules and regulations. I return one does get goverment services such as Police and Fire protection, Sanitation services. And yes, taxes are paid for these and others services but the additional cost in a civilized society is following their rules and regulations.
And if not agreeable, one can sell and move elsewhere. No restrictions on that.