A group of 17 state lawmakers on Tuesday urged a federal appeals court to protect one of the most treasured rights of a million New Yorkers — to pass on to family members a rent-stabilized lease even if forced to declare bankruptcy.
That right will be argued next month in a Manhattan courtroom after two judges ruled the lease of an East Village widow could be sold as any other household asset — like a car or a vacation home — to pay off creditors.
While not included in the state law that protects certain assets from a forced sale in a bankruptcy, rent-stabilized leases had been treated as such. Until now.
The current battle has drawn the attention — and ire — of tenants’ rights advocates and the lawmakers.
“[Treating the lease as common property] would upset the economic, social and cultural diversity that is a hallmark of countless municipalities in New York… [and] lead to rising rates of homelessness,” the lawmakers wrote in their filing.
The case centers on Mary Veronica Santiago-Monteverde, who pays $703 a month for her East 7th Street two-bedroom apartment that she has lived in since 1963.
When her husband died in 2011, she was unable to keep up with her debts and filed for bankruptcy.
In a deal with the court-appointed trustee of Santiago-Monteverde’s case — whose job is to marshal assets to pay creditors — the landlord agreed to pay her $23,000 in mostly credit card debt in exchange for buying the lease.
Under the deal, the landlord, JVG Management, allowed Santiago-Monteverde to stay in the apartment she shares with her son for the rest of her life and promised to keep her rent at $703 a month.
Under the terms of the lease sale, the son would not get the apartment.
“We believe that those who are opposing the trustee’s sale of the lease have lost sight of what is best for Mrs. Santiago-Monteverde,” David Dantzler, the lawyer for the trustee, said.
“This solution allows her to remain in her apartment for the remainder of her life at her current rent, and have her debts paid in full,” Dantzler added, noting that the law is clear and those who oppose the law should take their case to Albany — not to court.
The appeals court hearing is set for Oct. 14.
“It is fair to say,” Jenny Greenberg, who is representing the tenant said, “the landlord lobby is watching this very closely.”
The appellate court should avoid “granting a windfall to bankruptcy creditors (even landlords) who would ordinarily not be able to reach the lease,” the lawmakers argued in their court filing Tuesday.
Landlord JVG declined to comment.