KJC Obtains Dismissal of ISD Citation for Short-Term Rental Violation

KJC recently obtained a dismissal of a $9,000.00 citation issued to its client by ISD for alleged violations of the City of Boston’s Short-Term Rental Ordinance (the “Ordinance”). Attorney Nicholas F. Feloney, an Associate at KJC, successfully argued that ISD’s notices of violation were insufficient process and that the owner of the property was not liable for the $9,000.00 citation because it did not “offer” any of its units for short-term rental as required by the Ordinance’s penalty provision.

The Ordinance prohibits any person from “offering” an ineligible residential unit in the City of Boston for “short-term rental,” which is defined as a period of less than twenty-eight consecutive calendar days.  To be eligible for short-term rental use under the Ordinance, a residential unit must meet certain qualifications and complete a registration process with ISD.  The Ordinance provides certain exemptions for lodging houses, bed and breakfasts, and units offered for hospital or corporate stays. 

KJC’s client, the owner of a high-rise residential building in Boston, leased approximately thirty units to two corporate entities for 12-month terms.  The corporate entities in turn sublet the units.  The owner’s lease agreements with the entities prohibited them from offering or subletting the units for short-term rental, which the lease defined as a period of less than thirty-one consecutive calendar days.   

ISD, which is in charge of enforcing the Ordinance, later found units in the owner’s building listed for short-term rental on websites like flipkey.com.  Over the course of several months, ISD issued notices of violation to the owner that cited the following penalty provision under the Ordinance:

Any person who offers a unit as a Short-Term Rental, or any Booking Agent who accepts a fee for booking a unit as a Short-Term Rental, where such unit is not an eligible Residential Unit, shall be fined three hundred dollars ($300) per violation per day… 

See City of Boston Code, Ordinances, Chapter IX, Section 9-14.9 (emphasis added).  There were several issues with ISD’s notices, however.  Some of ISD’s notices were sent to a wrong address for the owner and none of ISD’s notices specifically identified what units in the owner’s building had been offered for short-term rental on the websites. 

The owner, which only leases its units for 3 to 12-month terms, had not offered any of its units for short-term rental on the websites or otherwise.  Despite the issues with ISD’s notices of violation, the owner, acting on its own initiative, determined that the corporate entities were responsible for the online listings that ISD had found.  Notably, the owner took immediate action to enforce the terms of its lease agreements with the entities by sending them cease and desist letters, advising them that they were in violation of the lease provision prohibiting short-term rental use of the units and demanding that they remove the online listings.   

Attorney Feloney appeared on behalf of the owner at an ISD hearing to appeal the $9,000.00 citation.  Attorney Feloney, in consultation with the Real Estate Management Team at KJC, argued that ISD’s notices of violation were insufficient process based upon the fact that some were sent to a wrong address for the owner and none specifically identified the units offered. Additionally, Attorney Feloney argued that the owner had not “offered” any of its units for short-term rental as required by the Ordinance’s penalty provision that ISD cited in support of its $9,000.00 citation.  ISD alleged that the owner had offered its units for short-term rental in violation of this provision based upon the online listings it had found.  However, the evidence showed that it was the corporate entities – and not the owner – that had offered the units for short-term rental.  There was no evidence that the owner permitted the corporate entities to offer the units for short-term rental based upon the terms of the lease agreement which specifically prohibited such use of the units.  Moreover, the owner took immediate action to enforce the lease against the corporate entities by sending them cease and desist letters.  Accordingly, the owner was not liable for the $9,000.00 citation because there was no evidence that the owner had offered, or permitted to be offered, any of its units for short-term rental in violation of the Ordinance.    

For all of these reasons, ISD agreed that the owner was not liable for a violation of the Ordinance and it dismissed the $9,000.00 citation. 

There are two key takeaways from this case.  First, every residential landlord in the City of Boston should have in its lease agreement an express provision prohibiting the tenant from offering the unit for short-term rental, as that term is defined under the Ordinance.  Second, upon notice that the tenant has offered the unit for short-term rental, the landlord must take immediate action to enforce the terms of the lease against the tenant. 

KJC is a prominent Boston-based law firm that can help you with all of your real estate related legal matters.  Please do not hesitate to contact us for a consultation.