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Brief: Stabilized Leases Shouldn't Act as Assets in Bankruptcy

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East Village tenant Veronica Santiago-Monteverde, who has lived in her $703/month two-bedroom apartment since 1963, is at the center of an ongoing lawsuit whose verdict would decide whether rent-stabilized leases can be used as assets in bankruptcy proceedings. About $23,000 in debt racked up after her husband's death, so Santiago-Monteverde filed for bankruptcy. Her court-appointed trustee, whose job is to collect all the assets he possibly can, and her landlord JVG Management negotiated a deal in which she would give up her stabilized lease in exchange for JVG paying off her debt. She could live in the apartment until her death—for the same rent—but would not be able to pass it on to her son.

Not so fast. City and state officials have taken issue with this treatment of a stabilized lease as an asset, and a new amicus brief filed this week with the Court of Appeals, where the case (which has been through several rungs of the legal system) will be heard again in October, says as much: "Such a lease, they argued, amounts to a public benefit, just like disability or unemployment benefits, that is exempted from a bankruptcy estate and cannot be seized." The case is important for the precedent it could set; if a judge decides in favor of the trustee-landlord side, it would be "a major risk to New Yorkers who seek protection and happen to live in rent-stabilized apartments." The court date is set for October 14.
· New York State and City Join Effort to Shield Stabilized Leases [NYT]
· Should Stabilized Leases Be Treated As Assets in Bankruptcy? [Curbed]