Airbnb and New York are in talks to resolve a lawsuit from the US state designed to curb short-term rentals on the sharing economy site.

According to Reuters, US district judge Katherine Forrest cancelled a hearing set for this week so both sides could “work out a consensual resolution”.

It follows a ruling by a Manhattan federal court in October that imposed fines of up to $7,500 on hosts who advertise rentals on platforms such as Airbnb for fewer than 30 days.

Airbnb alleges the new law is the result of pressure from hotel lobbyists concerned about vacancies and pricing power. It has said the law’s ambiguous wording could allow New York authorities to apply the law to online platforms like itself that host third-party listings, creating the risk of “significant civil penalties and criminal liability”.

If Airbnb is required to enforce local laws on short-term rentals, it could drastically reduce listings in some of its biggest markets.

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