Airbnb Sues New York Over Restrictive New Law The bill bans New York homeowners from advertising rentals of 30 days or less on Airbnb's website.

Airbnb has filed suit against the state of New York after Gov. Mario Cuomo signed into law a bill that restricts how Airbnb hosts can operate in the region.

New York law already bans rentals of 30 days or less if the owner of the property is not present. The bill signed by Gov. Cuomo, from Democratic Assembly member Linda B. Rosenthal, goes one step further and bans New York homeowners from advertising such rentals on Airbnb's website. Those who do so risk fines of $1,000 for the first violation, $5,000 for a second violation and $7,500 if caught a third time.

"Now, we have strong laws on the books to protect affordable housing and tenant's rights," Rosenthal said in a statement posted to Facebook.

Supporters argue that homeowners are flipping what used to be permanent rental properties into short-term Airbnb rentals or unregulated hotels, thereby reducing rental inventory in cities already in the midst of a housing crunch and forcing full-time residents to live next to a revolving door of travelers.

Airbnb says the bill is nothing more than a handout to the hotel industry.

"In typical fashion, Albany back-room dealing rewarded a special interest -- the price-gouging hotel industry -- and ignored the voices of tens of thousands of New Yorkers," Airbnb said in a statement. "A majority of New Yorkers have embraced home sharing, and we will continue to fight for a smart policy solution that works for the the people, not the powerful."

The company said it would file suit in New York on Friday afternoon.

Prior to Gov. Cuomo signing the legislation, Airbnb's head of public policy, Chris Lehane, penned an op-ed in the New York Daily News that proposed "a comprehensive set of clear, fair rules for home-sharing in New York City to serve as the framework for new legislation."

At the heart of Airbnb's plan is a provision that Lehane says will limit renters to leasing a single home within New York's five boroughs. Lehane also backed a registration system for short-term rental hosts -- similar to the online program it recently created in Chicago -- as well as a "three strikes" policy that would bar hosts from the service after repeatedly breaking the rules.

Cuomo, however, ultimately backed Rosenthal's bill. "This is an issue that was given careful, deliberate consideration, but ultimately these activities are already expressly prohibited by law," a spokesman for the governor told the New York Times.

NY Attorney General Eric Schneiderman, who has battled Airbnb on this issue for several years, said in a statement that "The law signed today will provide vital protections for New York tenants and help prevent the continued proliferation of illegal, unregulated hotels and we will defend it. Airbnb can't have it both ways: it must either police illegal activity on its own site -- or government will act to protect New Yorkers, as the State just did."

According to Airbnb's suit, the bill signed by Gov. Cuomo violates the Federal Communications Decency Act, the First and Fourteenth Amendments of the US Constitution and the home rule clause of the New York State Constitution. "The bill bears a striking resemblance to a similar ordinance banning advertising in Anaheim, CA; we filed suit against the city of Anaheim and the city immediately agreed to stop enforcing any of the provisions aimed at platforms, recognizing that its ordinance violated the" Communications Decency Act, Airbnb says.