Daily News: State court sides with tenants, says rent stabilized leases can’t be seized in bankruptcy

By Glenn Blain

ALBANY - New York's highest court handed a victory to tenants in rent stabilized apartments Thursday when it ruled their leases could not be seized as assets in bankruptcy proceedings.

The Court of Appeals, in a 5-2, decision sided with a 79-year-old Manhattan widow's argument that her rent-stabilized lease was a public assistance benefit and not an asset that could be liquidated as part of her bankruptcy case.

"When the rent-stabilization regulatory scheme is considered against the backdrop of the crucial role that it plays in the lives of New York residents, and the purpose and effect of the program, it is evident that a tenant's rights under a rent-stabilized lease are a local public assistance benefit," Judge Sheila Abdus-Salaam wrote in the majority decision.

The decision stems from the bankruptcy case of Mary Veronica Santiago-Monteverde, who has lived in her 7th St. apartment for more than 40 years and was forced to file for bankruptcy after the death of her husband in 2011.

During the bankruptcy proceedings, Santiago-Monteverde’s landlord offered to purchase her interest in the lease and the bankruptcy trustee accepted the deal.

"The decision will maintain the status quo as it has existed in New York for decades — so that a bankruptcy filing will not disrupt the residency of a rent-paying tenant in a rent-subsidized apartment. This should finally put the question to rest,” said Columbia Law School Professor Ronald Mann, who represented Santiago-Monteverde.

Copyright 2014 NYDailyNews.com. All rights reserved.