Court rules NYC landlords can’t seize rent-controlled units from bankrupt tenants

In a boon to New York City tenants, the U.S. Court of Appeals for the Second Circuit has ruled that rent-controlled apartments cannot be taken from bankrupt occupants.

The decision makes official a November ruling by the New York State Court of Appeals. The court was asked to weigh in on the issue and ruled 5-2 that rent stabilization should be considered a form of public assistance that cannot be seized by a bankruptcy estate and sold off to a tenant’s creditors.

The case concerned a bankrupt woman whose landlord offered to buy her $700-per-month East Village apartment from the trustee; pay her $100,00 to move out; and pay her creditors in full, Bloomberg News reported. A federal district court initially ruled that this should be allowed, and that the rent-stabilized apartment should be considered property of the bankruptcy estate.

The decision Monday removes the threat that New York City tenants who file for bankruptcy will be evicted from their apartments even when they are currently paying rent. [Bloomberg News] — Tess Hofmann