Running an apartment building as a hotel is not cheap in New York City as Salim Assa discovered. He will pay $1.2mm to the city in a settlement, ending a three year long fight over short-term leases of units in four Midtown Manhattan buildings.
The case began in 2015 when Assa was sued by the city for allowing two of his buildings to run illegal hotel operations (i.e. AirBnB or other short-term leases). Things escalated in 2016 when City inspectors found continued evidence of the short-term rentals. Those violations were used as a basis to hold Assa in contempt, with the potential to lose control of the buildings and potentially forfeit them as the receivership created a mortgage default situation. That more catastrophic outcome was avoided; the fine agreed to here settles the case.
Assa will also be forced to step away from day-to-day operations on the four buildings in question, 15 West 55th Street, 19 West 55th Street, 334 West 46th Street and 336 West 46th Street. And, of course, the buildings are still subject to surprise inspections from authorities to ensure compliance.
And, while the $1.2mm fine is significant, it sure beats jail time like individuals in Singapore potentially face for renting out their apartments.
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Really not worth it in NYC or Singapore
It’s relative, though. If you own 4 large apartment buildings in midtown, $1 million isn’t as much as it sounds.