Q I am a co-op owner. A renovation plan for my apartment was approved by the
building, the board and the city. Con Edison added a new power line to the building at no cost because the
building was at its capacity for the existing electrical load. It cost the building $150,000 to meter the new power line and also to complete
other renovations in the building to facilitate the installation. The building
board decided that the cost should be borne by the first shareholders who need
to add the extra power. This decision was made after my renovation plan was
accepted by the building board and, for that reason, is retroactive to my
project. But the addition was made to the common area, which should be the
responsibility of the entire cooperative. How can I prove that I am not liable
for the $15,000 charged to my co-op unit ($150,000 divided by 10)?
—Unfairly Charged
A “The issues raised here are governed by contract law,” says partner Stephen M. Lasser of New York-based Barton LLP. “Co-op proprietary leases are contacts between the co-op corporation and its
shareholders, which allocate building repair and replacement responsibilities,
including costs, between them. Standard proprietary leases provide that
shareholders are responsible for making repairs in the area bounded by the four
walls and the floor and ceiling of their apartments, and that all other repairs
and replacements are the responsibility of the co-op corporation. Accordingly,
the installation of a new meter contained in a common area and related
renovation work would appear to be the responsibility of the co-op corporation
to complete.
“The costs of renovations and repairs in common areas like the one described here
should be borne by all shareholders as a common expense and paid for by
maintenance and assessment payments collected from the shareholders. Standard
proprietary leases provide that maintenance and assessments be collected from
shareholders on a pro-rata basis, based on the number of shares owned by each
shareholder. As a result, it appears that the allocation of the meter
installation expense here to certain shareholders based on the needs of their
apartments rather than to all shareholders on a pro-rata basis would be a
breach of the contractual obligations contained in standard proprietary leases.
Therefore, if the letter writer has a standard proprietary lease, he could
withhold the maintenance payments allocated by the co-op corporation for the
meter installation and raise the defense that the co-op corporation lacked
contractual authority to collect it.”
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