Q&A: Inequity in Building Maintenance?

Q I am a shareholder in a Lower East Side tenement co-op. The building was originally 6 floors with 4 apartments on each floor. In 1985, we formed a corporation and purchased the building from the landlord who had us purchase a money mortgage. He wanted half the money down and gave us 10 years to pay the rest. We then became a co-op and some shareholders bought the apartments adjacent to theirs and added an additional 30 square feet to their existing units.

The problem is, these unit owners have not paid maintenance on the extra space they have acquired (our maintenance is based on square footage). The original amount each shareholder paid for an apartment was based on a certain price for square footage, and they did not pay for the extra footage either. Therefore, my apartment's maintenance is the same as other apartment's maintenance in the same line—even though they have about 30 more square feet. This situation exists in about half of the apartments in the building.

As soon as I realized this inequity, I brought it to the attention of the board beginning about 2 years ago by email and by formal letter. I have never received a written board response to this situation. It has only been occasionally discussed when meeting a board member on the stairs or street. All I have been told is that this is complicated and will take time to resolve. Any suggestions on how to go about curing this ongoing inequitable situation?

—Paying By the Foot

A “It appears there are two circumstances about which the letter writer is complaining,” says Abbey F. Goldstein, an attorney at Goldstein & Greenlaw, LLP in Kew Gardens. “First, that certain shareholders have 30 square feet extra, though they didn't pay for it, and, second, that the maintenance charged to those apartments does not reflect the increased square footage.”

“Whether the situation is legal depends entirely on the provisions in the letter writer's cooperative's Offering Plan and when the extra storage space was given to these shareholders. If the space was converted as part of the terms incorporated in the Offering Plan or amendments thereto prior to the building's conversion to a cooperative, then the terms are enforceable and fair or not, you are stuck with them.”

“If the rights to this 30-square-foot space are not reflected in the Offering Plan or the amendments thereto, and, assuming the cooperative did not receive any consideration (money) for the conveyance, the transaction would be subject to attack. In effect, conveying part of the common areas to certain shareholders on terms which are not commercially reasonable from the corporation's perspective, could constitute “corporate waste” for which the Board of Directors is responsible.”

“I would suggest as a first step making a formal demand, in writing, that the Board of Directors either rescind the conveyance or address the loss of income which the cooperative has suffered, or, assuming it claims that the space was transferred legally, the basis for that conclusion. If they do not do so within a reasonable period of time, the next step would be to consult an attorney concerning a 'shareholders derivative' action.”

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