Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Can a Rent-Stabilized Lease be Treated as a Bankruptcy Asset?
Author: Joel R. Glucksman
Date: November 1, 2013
Key Contacts
Back
For the first time in history, a United States Court of Appeals has been given the task of determining whether elusive rent-stabilized leases can be treated as assets under bankruptcy law. The outcome could affect thousands of Chapter 7 bankruptcy cases in New York City and, perhaps, in other urban areas with similar rent protection programs.
The New York Times recently highlighted the financial plight of Mary Veronica Santiago, who was forced to file Chapter 7 bankruptcy after falling behind on her credit obligations. Although Santiago – who resides in a rent-stabilized apartment in New York – has stayed current on her rental payments, the Chapter 7 trustee overseeing her case is attempting to treat her lease as a bankruptcy asset. This follows from the offer by Santiago’s landlord to buy out the rent-stabilized lease. The Chapter 7 trustee argues that this would provide needed cash to pay Santiago’s creditors and that the lease is a valuable asset that the trustee is authorized to sell. Thus far, both the bankruptcy court and the district court have sided with the trustee in treating the lease as an asset.
The attorneys for Santiago are disputing this, arguing that rent-stabilized leases are considered a public assistance benefit, similar to Social Security or disability payments, and should therefore be exempt from the bankruptcy estate’s reach, the news source reported. Further, her representatives argue that the New York laws attached to rent-stabilization are designed specifically to protect individuals who qualify for affordable housing assistance, a protection that would be in jeopardy if bankruptcy courts were permitted to treat them as assets.
One of the bigger questions surrounding the case is whether treating rent-stabilized leases as a bankruptcy asset will upset housing stability and threaten low-income families, many of whom are already susceptible to financial struggles and an increased bankruptcy risk.
“It’s an unfair money-grab,” David Shaev, New York state chairman of the National Association of Consumer Bankruptcy Attorneys, told the Times. “To remove this foundation, this safety net, it’s unconscionable.”
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
New Jersey Will Contest Grounds Explained
How Courts Evaluate Testamentary Capacity and Undue Influence Will contests in New Jersey are difficult to win, given the strong presumption that a properly executed will reflects the testator’s intent. However, challenges based on lack of testamentary capacity and undue influence remain common, particularly where there are concerns about mental capacity or the involvement of […]
Author: Marc J. Comer
Legal Issues Before Bringing on Investors
Bringing on outside investors can provide the capital and strategic support a business needs to grow. However, raising capital also introduces important legal, financial, and operational considerations. Before bringing on investors, businesses should address key legal issues to reduce risk, streamline investor due diligence, and position the company for long-term success. Early preparation signals that […]
Author: Dan Brecher
SECURE 2.0 RMD Planning Strategies
How the Updated Law Shapes Retirement and Estate Planning The SECURE 2.0 Act of 2022 materially reshapes the required minimum distribution (RMD) landscape, extending tax deferral opportunities while accelerating distribution requirements for many beneficiaries. For high-net-worth individuals and families, these changes are not merely technical. They require a reassessment of retirement income strategies, beneficiary planning, […]
Author: Marc J. Comer
Buying Commercial Property in New Jersey: Legal Guide for Small Businesses
Small businesses considering buying commercial property in New Jersey must evaluate a range of legal, financial, and operational factors. While ownership can offer long-term value and control, it also introduces significant risks if not properly structured. This guide outlines key considerations to help New Jersey business owners make informed decisions, minimize legal exposure, and successfully […]
Author: Robert L. Baker, Jr.
The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities
On January 28, 2026, staff of the U.S. Securities and Exchange Commission’s Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a joint statement clarifying how existing federal securities laws apply to tokenized securities. The SEC’s “Statement on Tokenized Securities” does not establish new law, but it does provide greater clarity on the […]
Author: Dan Brecher
Common Legal Mistakes NYC and New Jersey Business Owners Make
Operating a business in the New Jersey and New York City metropolitan region offers incredible opportunities, but it also requires navigating a dense and highly regulated legal environment. From entity formation to regulatory compliance, seemingly minor legal oversights can expose business owners to significant risk. In our work with businesses throughout the region, our attorneys […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.