New Yorkers hoping to rent out their apartments on Airbnb this summer may have to rethink their plans, after an administrative law judge ruled that the website violates an NYC law against operating illegal hotels.

Nigel Warren kicked off the controversy when he rented out his room in a two-bedroom East Village apartment for $100 a night. The renters' five-night stay was apparently without incident, and Warren's roommate didn't mind the arrangement.

New York City special enforcement officers who stopped by the building during Warren's absence weren't so understanding, though. They fined the building's owner, Abe Carrey, more than $40,000 for breaking a 2010 city law that prohibits landlords from renting out single-family homes or apartments for less than 30 days if they are not living in the property at the same time as their guests.

The short-term rental ban was initially geared toward landlords who were turning residential buildings into hotels, and Airbnb argued that it was never intended to apply to infrequent renters like Warren. The site also invoked an exemption in the measure for “houseguests, lawful boarders, roomers and lodgers.”

But ALJ Clive Morrick fined Carrey $2,400, ruling that Warren had indeed violated the law, since his guests were not traditional visitors, i.e. friends or family members. “[The exemption] does not apply to complete strangers who have no, and are not intended to have any, relationship with the permanent occupants,” Morrick wrote, according to Thomson Reuters.

Although Airbnb's terms and conditions remind hosts to comply with local laws, some have criticized the site for not more explicitly educating users about the potential ramifications they could face for illegally renting out their apartments.

For more InsideCounsel coverage of the hospitality and tourism industry, see:

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New Yorkers hoping to rent out their apartments on Airbnb this summer may have to rethink their plans, after an administrative law judge ruled that the website violates an NYC law against operating illegal hotels.

Nigel Warren kicked off the controversy when he rented out his room in a two-bedroom East Village apartment for $100 a night. The renters' five-night stay was apparently without incident, and Warren's roommate didn't mind the arrangement.

New York City special enforcement officers who stopped by the building during Warren's absence weren't so understanding, though. They fined the building's owner, Abe Carrey, more than $40,000 for breaking a 2010 city law that prohibits landlords from renting out single-family homes or apartments for less than 30 days if they are not living in the property at the same time as their guests.

The short-term rental ban was initially geared toward landlords who were turning residential buildings into hotels, and Airbnb argued that it was never intended to apply to infrequent renters like Warren. The site also invoked an exemption in the measure for “houseguests, lawful boarders, roomers and lodgers.”

But ALJ Clive Morrick fined Carrey $2,400, ruling that Warren had indeed violated the law, since his guests were not traditional visitors, i.e. friends or family members. “[The exemption] does not apply to complete strangers who have no, and are not intended to have any, relationship with the permanent occupants,” Morrick wrote, according to Thomson Reuters.

Although Airbnb's terms and conditions remind hosts to comply with local laws, some have criticized the site for not more explicitly educating users about the potential ramifications they could face for illegally renting out their apartments.

For more InsideCounsel coverage of the hospitality and tourism industry, see:

U.S. sues Wyndham hotels over data breaches

Former hotel owner sues Marriott, claims labor conspiracy

American Airlines and Orbitz settle long-running suit

Without women role models, Hilton Worldwide's GC blazed her own trail to the top