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It's Time for a Renter's Homestead Exemption

The October 21, 2013, New York Times discussed a case highlighting the need for a law exempting New York State's residential leases from being used to satisfy creditors' claims from judgments or in bankruptcy. Since 2005, the "homestead exemption" provided New Yorkers owning their homes increased from $10,000 to $150,000 of equity in their homes. The amount effectively doubles if the home is jointly owned.

For renters, only their security deposits are exempt.

This ill of this discrepant treatment is apparent when a tenant has a very valuable, low-rent lease. Permitting unsecured creditors or bankruptcy trustees to realize those lease's economic benefit can render un-monied tenants homeless. When an owned property's value is insufficient to satisfy the homestead exemption, selling the property to benefit unsecured creditors is usually rejected. If it is sold, homeowners may have up to $300,000 to find a new home.


Without an exemption, leases are at play. At best, renters have a few thousand dollars remaining in a security deposit. That fund is rarely sufficient to move and secure a market-rent lease. Therefore, homelessness can ensue. This result is contrary to the Bankruptcy Code's goal of a "fresh start for the honest but unfortunate debtor."


Long ago, the New York State legislature exempted from creditors' claims a debtor's pew in a place of public worship. It's time to better protect where they live.

My efforts to convince elected officials to address this need have failed.  Other voices are very welcome.


New York, New York, October 22, 2013  wg

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