New York City rent stabilized tenants won a major victory when a federal appeals court ruled that their leases can’t be seized in bankruptcy and sold to pay off creditors, the New York Post reported today. The U.S. Court of Appeals for the Second Circuit on Thursday reversed a lower court decision that a rent-stabilized lease could be sold like any other household asset to satisfy debts. State law doesn’t specifically shield rent-stabilized leases from a forced sale in the event of bankruptcy, but the issue hasn’t really been tested in the courts until this case. “We hold that section 282 (2) of the Debtor and Creditor Law (DCL) exempts a debtor-tenant’s interest in a rent-stabilized lease,” the appeals court said in a statement.
