Landlords in NYC can’t evict paying residents in bankrupty

March 12, 2015 9:48 am Published by

If you lived in a rent-controlled flat but needed to file for bankruptcy, would you worry about losing your home? According to the bankruptcy court’s decision in New York, you shouldn’t have to worry about losing your home when it’s rent-controlled. In fact, landlords aren’t even allowed to evict you as long as you’re abiding by your contract.

Thanks to the work of the New York State Court of Appeals and the U.S. Court of Appeals for the Second Circuit, which is based in Manhattan, those who are current on their rent but going through bankruptcy will no longer be able to be evicted from their homes. This goes against the argument that the leases should be able to be sold, helping raise the rent for new tenants and increasing the landlords’ income.

Previously, one tenant had been told that her rent-controlled property could be bought out by the landlord when she entered into bankruptcy. Now, the decision protects her right to rent-stabilization measures, because it’s been classified as a kind of public assistance. That means that bankruptcy trustees can’t sell the rent-controlled flats to pay back debts.

In the case that went to court, the female tenant fought the sale of her lease. Initially, the bankruptcy trustee put her lease up for auction, and her landlord offered to buy it and to pay the woman’s creditors in full. On top of that, he said he would give her $100,000 toward moving out. However, this offer was a win for the landlord had it been able to go through, since the property, which was being rented at $700 per month, would have been able to have been rented for much more at today’s market rates.

Source: Bloomberg Business, “NYC Landlords Can’t Touch Rent-Controlled Flats: Bankruptcy” William J. Rochelle III and Sherri Toub, Mar. 02, 2015

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