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Should Stabilized Leases Be Treated As Assets in Bankruptcy?

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Should rent-stabilized leases be treated as assets for bankrupt New Yorkers? That's the question at the center of a new lawsuit that's prevailed after Mary Veronica Santiago-Monteverde, who pays $703 per month for the two-bedroom apartment on East 7th Street she has lived in since 1963, was forced to declare bankruptcy after being unable to keep up with her debts following the death of her husband. In the wake of her declaration, two judges have ruled that the precious lease can be sold as an asset to help pay-off creditors. Now, 17 state lawmakers are urging a federal appeals court to treat Santiago-Monteverde's, and any other bankrupt, rent-stabilized New Yorker's, lease as a protected asset, reports NYP.

The deal carved out by Santiago-Monteverde's court-appointed trustee allows the leasee's landlord, JVG Management, to pay her $23,000 in credit card debt in exchange for the lease. Santiago-Monteverde will be allowed to live in the apartment she shares with her son until her death. However, her son will not inherit the home. Although there is no law protecting stabilized rents as assets, they have largely been treated as such. "[Treating the lease as common property] would upset the economic, social and cultural diversity that is a hallmark of countless municipalities in New York… [and] lead to rising rates of homelessness," the lawmakers urged on Tuesday. The appeals court hearing will take place on October 14.
· Widow's sale of $703-a-month apartment lease at center of dispute [NYP]