Saturday, November 22, 2014

Rent-Stabilized Leases Shielded in Bankruptcy

A new ruling by the Court of Appeals is great news for many New Yorkers who had been considering bankruptcy, but concerned that filing would cost them their rent-stabilized leases.


In a decision with implications for millions of tenants, New York State’s highest court ruled Thursday that a lease for a rent-regulated apartment is a public benefit and cannot be seized as an asset in a personal bankruptcy.

In a 5-to-2 vote, the Court of Appeals said that a rent-stabilized lease was exempted from a bankruptcy estate as a public assistance benefit, just like disability or unemployment benefits. Bankruptcy lawyers in New York who were closely monitoring the case said that not keeping the lease off limits would have made it easier for landlords to evict rent-stabilized tenants if they file for bankruptcy, even when they pay their rent.

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