The Real Deal New York

Court to rule in key rent-stabilization case

At question: whether such apartments can be sold when tenants declare bankruptcy
May 23, 2014 11:35AM

The New York State Court of Appeals agreed last week to rule whether a lease for a tenant’s rent-stabilized unit can be sold if the tenant declares bankruptcy. Lawyers for tenants argue that such leases are protected under a state law that shields local public assistance benefits, which also includes unemployment payments and welfare.

Rent-regulated tenants in the state have generally avoided Filing For Bankruptcy Court protection, fearing they would lose their homes as a result.

The issue arose from a court case regarding East Village resident Mary Santiago, who may lose her rent-stabilized co-op, where she pays $703 per month. She has lived on East 7th Street since 1965 and filed for bankruptcy protection in 2011. Her lawyer later testified that he did not know that the lease could be sold, the Wall Street Journal reported.

“There is a real deterrent effect on people possibly putting apartments at risk,” Peter Barker-Huelster of law firm MFY Legal Services told the Journal.

The court’s ruling could affect thousands of New York City tenants, the paper noted. [WSJ]Mark Maurer