Miami Beach Fines Landlord, Tenant Booted in Suit Settlement

The party is over in Miami Beach. At least at Stephen Kraus’ house. 

Just one day after the city of Miami Beach filed a nuisance lawsuit against the owner, a luxury rental company and tenant for operating an alleged illegal short-term rental and “party house,” the case settled. The settlement means a halt to rental activity at the house at 1776 Bay Drive, a permanently banned tenant and more than $453,000 in fines due to the city, according to a court document.

Kraus’ tenant, Scott Weissman, is CEO and founder of the NFT and Metaverse-focused firm TokenSociety.io, Crunchbase shows. TokenSociety.io owns the Gay Aliens Society, Dippies, and Dippies Vans NFTs, according to its website. 

Weissman is also CEO of a mask-producing company called Maskco Technologies, his LinkedIn shows. 

With this settlement, Weissman has until June 15 to vacate the Bay Drive home, and is permanently banned from renting or residing in the house that he has rented since November. Weissman is also barred from buying Miami Beach real estate for one year, and can’t throw any parties within city limits for three years. 

He also owes $66,375 to the city, to be paid within the next 30 days, according to the court document. 

Miami Beach cited 45 code violations at the property, and a combined $530,000 in unpaid fines in its complaint against Krause, Weissman and the luxury rental firm Nightfall Group. The suit also alleges a birthday cake was made mocking the city’s cease and desist order. 

In an email to The Real Deal, Kraus alleged that the Nightfall Group listed the Bay Drive home for short-term rental without his consent. He also blamed his tenant, saying that despite the lease having “very specific conditions about behavior, including one that emphatically states ‘no parties or noisy events,’” the current tenant “has been a nightmare” for him and the city.

“I am thrilled their lease is over and they will be vacating,” Kraus said.

The waterfront house at the center of the suit spans 5,300 square feet, with six bedrooms and seven bathrooms. It was built in 2015. Kraus bought it in 2020 for $6.5 million, a record price for the Normandy Isles neighborhood at the time. 

Kraus rented the home to Weissman for $84,000 for a seven-month lease, equating to $616,000 in total rent, according to the city’s lawsuit. 

Kraus is a real estate scion and no stranger to legal trouble. He is CEO and president of New York City-based home tech company Kraus Hi-Tech and the Kraus Organization, and the son of notorious New York City landlord and scofflaw Herman Kraus. Herman Kraus, who died in 2002, skirted property taxes for years, according to published reports. In 2018 the Kraus Organization portfolio still owed more than $100 million in property taxes to the city. New York City Comptroller Brad Lander testified in January that, “[Kraus] has a decades-long history of proposing egregious rent increases, self-dealing, and property tax delinquency.”

While the Kraus Organization wrangles with Big Apple officials over rent increases and tax payments, the settlement with Miami Beach officially bars Stephen Kraus from renting the Bay Drive home for the next six months. He also owes the city $387,650, which must be paid in full in the next 30 days, according to the agreement.

The Nightfall Group is required to remove advertisements for the Bay Drive house and pay the city a $250 fine, according to the settlement.

Miami Beach’s crackdown comes on the heels of new rules on fractional ownership for luxury properties in the city. Miami-Dade County has proven to be a magnet for investors hoping to take advantage of short-term rentals, but not all municipalities are embracing the model.