Airbnb's lawsuit challenging a New York state law that imposes steep fines on residents who want to rent their homes will now be heard in a New York City court. That's because the two parties agreed it is the city, not the state, that enforces the regulation, The Wall Street Journal reported.

The company filed the suit shortly after Gov. Andrew Cuomo signed a new short-term rental law on Oct. 21. His measure included costly fines on Airbnb hosts in an effort to deter the already illegal practice of advertising for short-term rentals by those who are not landlords or owners.

The fines imposed on an Airbnb host in that instance — a rental stay of fewer than 30 days — could be as high as $7,500.

The law would also help keep housing prices down and open up more apartments for long-term use.

“We have long sought to work with leaders in New York on clear, fair rules for home sharing, and we’re continuing to do all we can to protect the thousands of middle-class families who depend on home sharing to earn a little extra money,” Airbnb spokesman Peter Schottenfels said in a news release Tuesday.

The case will now shift to New York City, which is Airbnb’s largest market in the United States. A hearing with city officials is expected on Dec. 17.

The outcome of that decision could serve as a guide for legislation in other cities, which are attempting to draft similar laws to regulate short-term leases in direct response to Airbnb’s booming business model.

Many supporters of the governor’s law feel Airbnb is siphoning business from hotels, and that it lacks sufficient regulation.

The state law will not be enforced until the lawsuit is resolved, Bloomberg News reported.