If you suspect a landlord is renting an apartment illegally, your first instinct may be to report it. But before you can tell the local government, “my landlord is renting illegally,” you’ll need to make sure the rental isn’t registered with the authority responsible for home inspections. If the rental is illegal, the landlord may be charged fines and forced to evict any illegal tenants.
Determining a Unit’s Legality
By law, the definition of an illegal rental unit is one that is not established with local authorities as a rental property. The first step to report illegal renting of houses or apartments is to verify that it’s illegal. Check with the department in your county that handles home inspections to see if it’s registered.
If you want to let the city know, “My landlord is renting illegally,” it can also help to first know what qualifies as an illegal rental. Rental enforcement varies by city, and there can be a fine line between a guest and a tenant. If the guest pays rent, uses the property as a mailing address, makes maintenance requests and lives on the property long-term, the local government may consider the person a renter.
Penalty for Renting Illegal Apartment
So what will happen to landlords who illegally rent units? Penalties can vary dramatically from one city to the next. However, in New York City, where illegal rentals are an ongoing problem, landlords can face up to $15,000 in fines. That penalty for renting an illegal apartment does not include any fines the landlord will pay for building violations and legal costs.
If you’re planning to report illegal renting of a house, you may have noticed a short-term, vacation rental-style of home nearby. In New York City, penalties for this type of illegal rental are $1,500 per online listing per property. If the unit violated codes or tenants filed lawsuits related to the illegal rental, the costs could quickly rise well above that.
In the Airbnb era, an increasing number of people reporting “my landlord is renting illegally” are seeing short-term rentals rather than monthly or yearly leases. If your landlord or neighbor has a vacation rental, it’s probably fairly obvious due to the constant flow of people through the unit. In some cases, your area may not even be zoned for vacation rentals since many non-metropolitan areas still aren’t.
The penalty for renting illegal apartments on vacation rental sites also varies from one area to another. Hawaii has been cracking down on the practice recently, voting in a $20,000 penalty on illegal vacation rentals. In addition to that, there’s a $10,000 fine for each day the rental property continues after being cited.
If Your Apartment Is Illegal
As a renter, the temptation to take one of those illegal rentals can be hard to resist, especially in cities where rents are much higher than your monthly income. In New York City, where you can expect to pay more than $2,000 a month for even a modest one-bedroom apartment, you can find one of these unregistered rentals for less than $1,000. However, renting an illegal apartment comes with its own risks, including that your landlord won’t have to comply with local laws relating to renting places to tenants.
If you’re simply an observer and you report an illegal renting house or apartment, you won’t be protected under any laws that help renters in these situations. However, if you’re the person living in the illegal unit, you may be able to withhold rent until the situation is resolved, provided the landlord lied to you about the legality of the unit. Unfortunately, though, if your unit is found to be illegal and your landlord doesn’t want to take measures to make it legal, you’ll probably find yourself looking for a new place to live.
- Landlordology: When Does a Guest Become a Tenant?
- Avalara: New York City Cracks down on Illegal Short-term Rentals in Raid
- NY Daily News: Renting Illegal Apartments Can Be a Cheap Solution — but It's Often Too Risky
- Ground Floor: Average Rent in NYC: A Cheat Sheet for Renters on a Budget
- Money: A Woman Is Being Evicted and Fined $185,000 for Renting Her Apartment on Airbnb to Pay Medical Bills
- Brick Underground: I Found out My Apartment Is Illegal, and Now My Landlord Wants to Evict Me. Can I Get Rent Money Back?
Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a ghostwriter for a credit card processing service and has ghostwritten about finance for numerous marketing firms and entrepreneurs. Her work has appeared on The Motley Fool, MoneyGeek, Ecommerce Insiders, GoBankingRates, and ThriveBy30.