Co-Living Conditions Drawing Scrutiny From New York AG

Co-living companies, often billed as part of the answer to the city’s affordability crisis, have got the attention of the lawyers who say some operators may be flouting New York’s housing laws.

Tenants at Bungalow, a startup worth $600M, say the company scammed them by luring them into renting substandard homes, terminating their leases early and ignoring maintenance requests, Gothamist reports. In some cases, residents have found strangers in their bedrooms.

The companies are now being “monitored” by New York Attorney General Letitia James’ office, the AG's office told the publication.

“I keep asking myself: Why isn’t anyone taking action?” Michelle Itkowitz, an attorney who previously represented co-living companies, told Gothamist. “Because at some point, there’s going to be a lawsuit that’s going to whack the entire foundation of this business model.”

In other instances, Bungalow gave 15 tenants 90 days to move out, even though they had a year left on their leases. One tenant complained of a violent roommate who left blood splattered on the walls, others of maintenance requests that wouldn't be addressed.

Co-living operators are able to get around the city’s multiple dwelling law by putting several tenants on a master lease, but legal experts told Gothamist most don't actually do that. One lawyer says there is little regulation, and others suggested that the city could take a similar approach to what it has done with Airbnb. The Mayor’s Office of Special Enforcement could possibly expand its mandate and take legal action against the companies directly.

Bungalow and other co-living companies told Gothamist they are operating within the law.

Co-living companies have been hit hard by the pandemic. Companies like The Collective and Quarters collapsed as many renters avoided tight living conditions with strangers, and as people migrated away from the large urban centers where most co-living buildings operate.

Other companies have been able to hold on, and some have thrived. Common, for example, has grown its unit count from 2,000 under management when the pandemic began to 7,000. This summer, Manhattan-based CSC Coliving is taking on the conversion of the Hudson Hotel at 346 West 58th St., with the view of turning the shuttered 878-room hotel into a 438-unit project with apartments ranging from studios to three-bedrooms.