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
Fort Monmouth Redevelopment and the Transformation of Monmouth County Real Estate
The Fort Monmouth redevelopment has entered its execution phase, and it is repositioning the broader Monmouth County real estate market. When Netflix and the Fort Monmouth Economic Revitalization Authority closed on the 292-acre Mega Parcel in December 2025, the transaction did more than hand over a deed. It marked the moment Fort Monmouth stopped being […]
Author: Donald M. Pepe
Local Zoning and Land Use Rules Every New Jersey Rental Property Owner Should Understand
Owning a residential rental property in New Jersey involves more than finding tenants and collecting rent. Property owners must comply with a combination of state laws, municipal ordinances, building and housing codes, and zoning and land use regulations. These requirements can affect everything from the number of dwelling units permitted at a property to whether […]
Author: Donald M. Pepe
Real Estate Litigation Explained: Top 5 Disputes and How to Avoid Them
The five most common real estate disputes are breach of contract claims, landlord-tenant conflicts, zoning and land use disagreements, construction claims, and boundary disputes. Understanding why each arises, and taking preventive steps early, can help property owners, tenants, developers, and investors avoid costly litigation. Key Takeaways: Real estate transactions are complex endeavors involving numerous parties […]
Author: Paul Grossman
When a Child Turns 18: The Gap in Your Family’s Estate Plan
Once a child turns 18, parents lose the automatic legal authority to make medical and financial decisions on their behalf, even if the child still lives at home or remains on the family’s insurance. Three documents close that gap: a durable power of attorney, a health care proxy or directive, and a HIPAA authorization. For […]
Author: George McGowan
Business Mediation: An Overview and Practical Tips
Business mediation is a confidential, voluntary process in which a neutral third party helps companies negotiate a resolution to a commercial dispute without going to trial. Because working with a mediator is very different from litigating in the courtroom, it is important to understand how commercial mediation works, when it makes sense for your dispute, […]
Author: Paul Grossman
Top 5 Causes Leading to Construction Defect Litigation
The five most common causes of construction defect litigation are design defects, substandard materials, workmanship defects, code violations, and subsurface defects. Because these flaws can compromise a building’s integrity, functionality, or safety, they frequently lead to disputes involving multiple parties and high financial stakes. Key takeaways: What is Construction Defect Litigation? Construction litigation is complex, […]
Author: Paul Grossman
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.