The Real Deal New York

Pols seek to protect rent-stabilized leases during bankruptcy

Lawmakers fear deal to sell regulated unit lease in Manhattan could set precedent

September 03, 2014 12:40PM

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New York Assembly member Linda Rosenthal

New York Assembly member Linda Rosenthal

A deal struck between an East Village tenant and her landlord has ignited a debate over whether a rent-stabilized lease can be sold as an asset in bankruptcy proceedings.

The debate centers around the case of Mary Veronica Santiago-Monteverde. In a deal reached with her court-appointed trustee, Santiago-Monteverde agreed to sell her regulated lease to her landlord in order to pay off her debt. She was able to stay in the apartment, but lost her right to pass the lease on to her son, the New York Post reported.

Some lawmakers and housing advocates are concerned that the case could set a precedent for seizing rent-stabilized units in future bankruptcy proceedings, according to reports.

Now, State Assembly member Linda Rosenthal of Manhattan has proposed legislation that would more explicitly protect rent-stabilized housing under Chapter 7 bankruptcy, Law360 reported. On Tuesday, 17 state lawmakers asked the federal appeals court to side with Santiago-Monteverde in her legal challenge to the sale, the Post reported.

The trustee’s actions have been upheld by a bankruptcy judge and federal district judge, Law360 reported. The case goes before the New York State Court of Appeals on October 16. [NYP] and [Law360]Tom DiChristopher

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