This takes away the fear that tenants can be evicted from their rent-stabilized homes if they file for bankruptcy, even if they pay their rent on time. Landlords, however, argue that it places hardship on property owners who provide these apartments.
Queens, NY (PRWEB) April 06, 2015
There are new legal protections for NYC tenants who are going through bankruptcy in New York. The decision comes after a ruling in case 12-4131 (Santiago-Monteverde v. Pereira) in the U.S. Court of Appeals for the Second Circuit in Manhattan. Bruce Feinstein, Esq., a New York bankruptcy attorney, recently shared the information of this court case and the impact it may have on people with rent-stabilized apartment who are filing for bankruptcy in New York City. The Law Offices of Bruce Feinstein., Esq. was not directly involved with the case proceedings.
According to court documents, the case began when a woman going through Chapter 7 bankruptcy found out that her landlord offered to buy her apartment from her bankruptcy trustee. The apartment, which was a rent-stabilized at $700.00-a-month, would then be considered part of the bankruptcy estate. Initially, a federal district court ruled in favor of the sale, which would also include $100,000.00 for the renter and payment-in-full to her creditors. However, there were several questions raised over how to define the legal standing of rent-stabilized leases. “This is an interesting case because it shows there can be very different schools of thought on how to define assets, ownership, and public benefits,” says Mr. Feinstein.
Some Chapter 7 Trustees and Landlords were of the belief that rent-stabilized leases can be sold in Chapter 7 bankruptcy, just like regular leases and other assets. Advocates for tenants’ rights, however, disagreed with this and stated that they are public benefits, much like Section 8 housing, and are protected by the bankruptcy court. The rent stabilization program – also known as the Emergency Tenant Protection Act in New York City - began in 1974, and it was created to regulate how much rent could be raised in certain apartments, according to the New York State Office of Homes and Community Renewal. If the rent rose above $2,500 per month or household income rose to over $200,000 annually for two years in a row, the regulated status would no longer be valid.
“The court’s decision acknowledges that rent stabilization should be seen as a form of public assistance, which cannot be taken by the bankruptcy estate and subsequently sold to the tenant’s creditors,” explains Mr. Feinstein. “This takes away the fear that tenants can be evicted from their rent-stabilized homes if they file for bankruptcy, even if they pay their rent on time. Landlords, however, are arguing that it places hardship on the property owners who provide the rent-controlled apartments.”
For the plaintiff in the case, the decision means that the value of her lease, and her legal right to live in the apartment, cannot be considered property of the bankruptcy estate. “This means that her rent-stabilization rights are considered an exempt asset during her bankruptcy proceeding,” says Mr. Feinstein.
The Law Offices of Bruce Feinstein has nearly two decades of experience in bankruptcy law, helping clients and families resolve their issues and move forward with their lives. Visit feinsteinbankruptcylaw.com for more information or call (718) 514-9770 to reach the New York office.