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
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Author: Brian D. Spector
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Author: Christopher D. Warren
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
Author: Scott H. Novak
President Trump's Termination of Member Gwynne Wilcox
On January 28, 2025, the Trump Administration terminated Gwynne Wilcox from her position as a Member of the National Labor Relations Board (NLRB or the Board). Gwynne Wilcox, a union side lawyer for Levy Ratner, was confirmed to the Board for an original term in 2021 and confirmed again for a successive five-year term expiring […]
Author: Matthew F. Mimnaugh
Breach of Contract Explained: Types and Consequences
Breach of contract disputes are the most common type of business litigation. Therefore, nearly all New York and New Jersey businesses will likely have to deal with a contract dispute at least once. Understanding when to file a breach of contract lawsuit and how long you have to sue for breach of contract is essential […]
Author: Brittany P. Tarabour
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide
Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]
Author: Christopher D. Warren
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.