"New Amendments to State and City Law Prohibit Hotel Uses in Class A Multiple Dwellings"

A new law (the "New Law"), effective as of May 1, 2011 (the "Effective Date"), prohibits the operation and occupancy of hotels that are classified as Class A multiple dwellings ("Class A Buildings"), a classification of apartment buildings intended to be used for permanent residency purposes (i.e., more than 30 days). Prior to this date, owners of Class A Buildings have relied on interpretations of statutory language contained in State and City laws in order to rent units in Class A Buildings as hotel rooms (i.e., shorter than 30 days) without conforming such buildings to more stringent Class B fire safety standards applicable to hotels, hostels and other popular short-term rentals. The New Law amends various sections of the New York State Multiple Dwelling Law and the New York City Administrative Code to clarify that only permanent residency, not transient occupancy, is permitted in Class A Buildings.

Aside from several narrow exceptions, including an option for certain eligible dwellings to convert to Class B occupancy, the New Law broadly prohibits units in Class A Buildings from being rented as hotel rooms, effectively eliminating any argument that hotel occupancy can be maintained under a Class A certificate of occupancy.

This Stroock Real Estate Practice Group Special Bulletin examines the New Law and its key implications for Class A Buildings.