Will I lose My Rent Stabilized Apartment in a Chapter 7 Bankruptcy in NYC?
The Court of Appeals for the Second Circuit ruled in March 2015 that a rent stabilized leases should be considered "local public assistance benefit, " similar to social security and as such, not an asset that a trustee can sell in a bankruptcy for the benefit of creditors.
Will I lose My Rent Stabilized Apartment in a Bankruptcy in New York City?No. By a decision dated March 31, 2014, the Second Circuit Court of Appeals requested that the New York Court of Appeals determine whether a debtor-tenant possesses a property interest in the protected value of his or her rent-stabilized lease that may be exempted (essentially excluded) from her bankruptcy estate pursuant to New York State Debtor and Creditor Law, Section 282(2) as a "local public assistance benefit." The Second Circuit Court of Appeals certified that question to the New York Court of Appeals. In a victorious Court decision for tenants with Rent Stabilized Apartments, the New York Court of Appeals in the decision of Mary Veronica Santiago-Monteverde v. John S. Pereira Santiago-Monte, 2014 NY Slip Op. 8051 adopted the position of Appellant Ms. Santiago-Monterverde. Ms. Santiago-Monteverde maintained that the chapter 7 bankruptcy trustee had no right to sell her interest in her rent stabilized lease because she had a right to exempt such interest under the New York State Debtor and Creditor Law, Section 282(2) which exempts the "right to receive or ...interest in...a social security benefit, unemployment compensation or a local public assistance benefit." Mrs. Santigao-Monteverde contended that New York's Rent Stabilization Code, N.Y. Comp. Codes R. & Regs. tit. 9, 2520.1 et seq., makes the lease, or some portion of its value, exempt from the tenant's bankruptcy estate as a "local public assistance benefit" within the meaning of New York Debtor and Creditor Law ("DCL") section 282(2). The New York Court of Appeals agreed with Appellant and on March 2, 2015, the Second Circuit Court of Appeals incorporated the ruling of the New York Court of Appeals. This is a victory for the over 2 million New York City residents who are in rent stabilized apartments. Such tenants can file a bankruptcy without concern that their interest in their leases will be sold from under them.
Is the Law In Effect Now?Yes. You can file bankruptcy without any concerns about your home being taken from you.