New York’s highest court weighed in yesterday on a dispute over a plan by a bankruptcy trustee to sell the rent-stabilized apartment of an 80-year-old East Village woman to her landlord, the Wall Street Journal reported today. Arguments before the Court of Appeals focused on whether such leases were considered transactions like any leases, or public benefits conferred by the state legislature that should be protected from bankruptcy court. Some judges on the Court of Appeals sharply questioned a lawyer for Mary Santiago, the East Village woman. He argued that a state law that listed exemptions from bankruptcy for “public-assistance benefits” meant to include rent-stabilized leases, though the law doesn’t specifically mention them. Several judges seemed sympathetic to another argument, raised by lawyers for Attorney General Eric Schneiderman and Mayor Bill de Blasio, that rent stabilized leases couldn’t be considered property at all, since they couldn't be legally bought and sold by tenants. Under a bankruptcy court ruling, Santiago would have been permitted to live in her apartment at the same rent for the rest of her life but would give up the right to pass the apartment to her son. Santiago appealed. The state court was asked by the Second U.S. Circuit Court of Appeals to step in and examine the state law setting exemptions for state residents from bankruptcy.
