Rent-stabilized leases: Fair game in bankruptcy?

New York /
Oct.October 21, 2013 05:31 PM

Rent-stabilized leases have been dubbed assets in some bankruptcy proceedings in recent years. Now, for the first time, a federal appeals court is weighing in.

Mary Veronica Santiago, an East Village resident who has lived in a rent-stabilized two-bedroom off Tompkins Square park for 50 years, filed for bankruptcy two years ago. Her case, now closely watched by lawyers and industry insiders, hangs on whether her lease can be seized as an asset to pay off creditors.

The issue at hand is whether a rent-stabilized lease can be treated just like a car or piece of land in bankruptcy proceedings.

Should that be the case, bankruptcy lawyers say, evicting rent-stabilized tenants could become easier for landlords, even if they are not among that person’s creditors.

“This is not what bankruptcy is about,” Kathleen Cully, one of Santiago’s pro bono lawyers, told the New York Times. “What’s next? Are they going to start going after food stamps?”

Some bankruptcy lawyers even told the Times they advise clients with rent-stabilized leases against filing for Chapter 7 bankruptcy because of the risk to their living accomodation.

And yet the trustee in Santiago’s case, John Pereira, said he is obliged to pool all possible assets to see that her debts are paid. Bankruptcy, he said, is a painful process.

“If you file for bankruptcy, there are consequences,” Pereira told the Times. [NYT]Julie Strickland


Related Articles

arrow_forward_ios
Blackstone CEO Steven Schwartzman and Stuyvesant Town (Credit: Getty Images)
After authorities vowed review of Stuy Town deal, Blackstone changes course on vacancies
After authorities vowed review of Stuy Town deal, Blackstone changes course on vacancies
Tete-à-tete with TRD: How landlords are dealing with New York’s new rent laws
Tete-à-tete with TRD: How landlords are dealing with New York’s new rent laws
Tete-à-tete with TRD: How landlords are dealing with New York’s new rent laws
Real Capital Analytics data showed that New York’s multifamily market had a very slow July. (Credit: iStock)
New NYC rent law “beginning to shut down investment”
New NYC rent law “beginning to shut down investment”
Strulovitch lender Marvin Azrak of Maguire Capital with three of the landlord's buildings
Chaskiel Strulovitch saves 18 of his 31 buildings with costly loan
Chaskiel Strulovitch saves 18 of his 31 buildings with costly loan
Troubled Brooklyn landlord All Year files for Chapter 11
Troubled Brooklyn landlord All Year files for Chapter 11
Troubled Brooklyn landlord All Year files for Chapter 11
Bronx landlord could lose property after filing for wrong type of bankruptcy
Bronx landlord could lose property after filing for wrong type of bankruptcy
Bronx landlord could lose property after filing for wrong type of bankruptcy
What 3 big mall bankruptcies say about the state of retail
What 3 big mall bankruptcies say about the state of retail
What 3 big mall bankruptcies say about the state of retail
Steven E. Baker, Danielle Winick, Jeff Winick, Lee Block and Louis Eisinger (Winick Realty Group)
Majority stake in Winick Realty auctioned to insiders as IRS waves red flags
Majority stake in Winick Realty auctioned to insiders as IRS waves red flags
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...