Value of Rent-Stabilized Lease Is Bankruptcy Estate Property

May 11, 2012

LVT Number: #24081

Rent-stabilized tenant sought Chapter 7 bankruptcy protection, listing his unexpired lease as an executory contract. When the bankruptcy trustee told tenant that he would sell the lease to landlord, tenant tried to claim that his lease was personal property that was exempt under New York debtor/creditor law. The trustee objected. The court ruled that the value of tenant's rent-stabilized lease didn't qualify as an exempt public assistance benefit under New York law and remained estate property because the lease was an estate asset that could be sold for value.

Rent-stabilized tenant sought Chapter 7 bankruptcy protection, listing his unexpired lease as an executory contract. When the bankruptcy trustee told tenant that he would sell the lease to landlord, tenant tried to claim that his lease was personal property that was exempt under New York debtor/creditor law. The trustee objected. The court ruled that the value of tenant's rent-stabilized lease didn't qualify as an exempt public assistance benefit under New York law and remained estate property because the lease was an estate asset that could be sold for value. The differential between rent payable for a rent-stabilized apartment and a comparable unregulated rent can be monetized in bankruptcy and isn't properly compared with the right of a qualifying debtor to receive a public assistance payment.

In re: Santiago-Monteverde: Index No. 11-15494, NYLJ No. 1202549245990 (SDNY; 4/10/12; Peck, J)

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