NYC rent-stabilized leases off-limits in bankruptcy: court

By Daniel Wiessner (Reuters) - A U.S. appeals court ruled on Monday that an elderly Manhattan woman's rent-stabilized lease could not be seized and sold to satisfy her creditors after she filed for bankruptcy, a decision that could affect more than 2 million New Yorkers. The 2nd U.S. Circuit Court of Appeals said Mary Santiago-Monteverde's lease, which she has had for more than four decades, qualified as a "local public assistance benefit" that state law places off-limits to bankruptcy creditors. The court said the public assistance exemption was designed to protect debtors' essential needs, including housing. About 2.2 million residents of New York City live in rent-stabilized apartments, according to its Rent Guidelines Board. Santiago-Monteverde, who is in her 80s and pays about $700 a month rent in the East Village, filed for bankruptcy in 2011 after her husband died because she could not pay off credit card debt, according to court papers. In November, the New York Court of Appeals, the state's top court, rejected claims by Santiago-Monteverde's bankruptcy trustee, John Pereira, that only cash payments from the government count as public assistance. According to court records, Pereira offered to sell the lease to Santiago-Monteverde's landlord for about $150,000 to satisfy her debts and legal fees. She moved to exempt her lease from the proceedings, however, saying it would lead to her being evicted and losing the right to pass the apartment on to her adult son. Ronald Mann, Santiago-Monteverde's lawyer, said a ruling against his client would have forced New Yorkers in stabilized apartments to choose between filing for bankruptcy and keeping their homes. Pereira's lawyer did not respond to a request for comment on Monday. The case is Santiago-Monteverde v. Pereira, 2nd U.S. Circuit Court of Appeals No. 12-4131. (Reporting by Daniel Wiessner; Editing by Ted Botha)