Riverhead Town has settled a lawsuit brought against a Manhattan-based company the town said was operating a short-term rental property on Overlook Drive in Aquebogue.
The town attorney signed a stipulation of settlement on Jan. 29 with Canal House, LLC, d/b/a “Victorville by the Sea” and Victor Ozeri, the sole member of the limited liability company that owned the property. The Town Board is expected to pass a resolution at its next meeting ratifying its authorization for the town attorney to sign the stipulation.
The stipulation of settlement requires the defendants to pay a civil penalty of $25,000 to the town, payable in two installments: $10,000 upon signing and the balance of $15,000 by June 1.
Under the terms of the settlement, the defendants neither admit nor deny violating the town code provisions as alleged by the town in its complaint filed in October 2020.
The complaint alleged that the property owner, without a rental permit from the town, was marketing the property online as “Victorville by the Sea,” a vacation rental featuring a house and seven cottages, which together “sleeps 42-46 people.”
The defendants offered the property for rent on weeknights for $4,900 per night and on weekends for $5,900 per night, according to the complaint. Weekend reservations required a two-night minimum stay, the complaint alleged. The defendants also offered the individual rooms and cottages for rent at rates ranging from $289 per night to $1,068 per night, also for a two-night minimum stay, according to the complaint.
The town code prohibits transient rentals, with limited exceptions that did not apply to the “Victorville” rentals, the complaint states.
Riverhead Town in 2013 banned transient rentals except by legally operating commercial hotel/motel businesses or bed-and-breakfast establishments. Transient rentals are defined by the code as rentals for a period of 29 days or less.
Defendants were renting the property at 228 Overlook Drive site since at least May 2018, the town said in the complaint.
The town also accused the property owner of making alterations and adding rooms inside the house and adding a cottage, a poolhouse, a boat house and converting a detached garage into habitable space without permits from the town and allowing the occupancy of the additions without first obtaining certificates of occupancy.
Canal House and Ozeri in signed a stipulation in February 2022 in which the property owner agreed it would not advertise the property for rent or otherwise offer it for rent pending the outcome of the lawsuit.
Canal House sold the property to Route 48 Partners LLC for $1.675 million on Oct. 2, 2023, according to Suffolk County records.
Canal House was represented by Anthony Palumbo. Riverhead Town was represented by Town Attorney Erik Howard.
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