Rent your apt as a hotel and your broker could be out of a job

By Ronda Kaysen  | September 27, 2012 - 2:38PM

If you’re planning to flout your building’s short-term rental rules, it may be harder to find a broker to help you after word gets around about one who found herself in a bit of hot water with the board of a 210-unit luxury Midtown condo where she had six listings and had once owned an apartment.

According to a complaint filed on Sept 24 by Corcoran broker Katherine Mc Farland against the condo board and against Corcoran, a dispute that had been brewing for some time came to a boil after she created a postcard for a rental at The Link, a full-service condo on West 52nd St. The mailer advertised that the $9,800 apartment would cost $327 by the night.

On Sept. 14, the board’s law firm, Braverman & Associates, sent an email suggesting that Corcoran consider prohibiting McFarland “from conducting any further business (whether sales or leasing)” at the condo building. The board also said it would file a formal complaint with the “appropriate licensing authority."

Rather than stand behind McFarland, her complaint says, Corcoran directed McFarland to cancel appointments with clients in the building and declined to provide McFarland with legal counsel.

Upon learning of the situation, "Corcoran acted wtih the utmost professionalism and respect for the restrictions contained in the condominium's governing documents and applicable law," real estate attorney Robert Braverman, whose firm represented the condo board, told BrickUnderground.

McFarland has serious ties to The Link. She owned an apartment there until 2009, and earlier this fall her listings included a $9,800 a month rental and a $1.14 million unit that was under contract.

Describing the entire incident as a “misunderstanding,” McFarland filed a lawsuit against both the Link and Corcoran, suing each of them for more than $10 million.

In the complaint (downloadable at the bottom of this post), McFarland argued she wasn’t renting the apartment as a hotel. The postcard was intended to show that $9,800 a month rent was a reasonable price when you considered you would only pay $327 a night (over the course of a year.)  Corcoran didn’t seem to have a problem with the language either, since the firm approved the card, according to court documents.

“No reasonable person looking at the postcard would believe that the $327/night or $9800/month language is an offer to lease the unit on a nightly basis or as a hotel room,” court documents for McFarland argue. Ultimately, she pointed out, the apartment wasn’t rented as a hotel. A tenant signed a 12-month lease for $8,500 a month. 

The condo board argued precisely the opposite--namely, that any reasonable person looking at the postcard would believe that the apartment was available for nightly rental.  The judge agreed with the board, Braverman told BrickUnderground, and refused to sign a temporary restraining order compelling the board and Corcoran to permit McFarland to continue unfettered operations at the building. 

This isn’t the first time McFarland, who declined to comment for this story, has found herself entangled in a sticky situation at the Link.

A year ago, the board sent a letter to a senior managing director at Corcoran when it learned that one of its residents had rented out his unit as a short-term rental. In the letter, the board accused McFarland of representing the owner, identified as Mr. Tai in court documents.

But McFarland argues in her complaint that the board had it wrong – she wasn’t the broker involved in the rental and the transaction was completed by another broker while she was on vacation. Braverman told BrickUnderground that there are emails authored by McFarland that contradict her explanation.

(Note to short-term rental scofflaws: The condo board enjoined the unit owner, who agreed to reimburse the building for all of its attorneys fees, says Braverman.)  

This week, just a few days after filing the action against the board and Corcoran, McFarland withdrew her entire case against the Link and Corcoran, according to lawyers for the board.

Corcoran could not be reached for comment for this story.  



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