Wednesday, October 23, 2013

Rent-control in the East Village: Is the Below-market Lease an Asset, in Bankruptcy?

This is very interesting.  Someone is finally recognizing, in the court case below, the actual economic implication of the "rent" created by rent control!

If I am a long-time resident, my lease is extremely valuable in a rent-controlled city.  That's why people sub-let, instead of moving out.

But then that means that the lease is an asset.  In a bankruptcy proceeding, that asset can be sold off?  Or...can it?  To admit this would be to admit that the actual value of the apartment is far more than the rent-controlled lease allows.  Can the city face up to its hypocrisy?

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Do you have suggestions on where we could find more examples of this phenomenon?