All Shareholders Are Created Equal – and Must Be Treated Equally

An Upper East Side co-op has a roof garden, the personal fief of the top-floor shareholder. The garden drinks a lot of water. A downstairs shareholder wonders if the upstairs neighbor shouldn’t pay a larger share of the co-op’s water bill, since she is using more water than anyone else.

“The law is set up to make sure that co-ops’ expenses are allocated based on the number of shares,” attorney Leni Morrison Cummins, of the firm Cozen O’Connor, tells the Ask Real Estate column in the New York Times. “That’s the core premise of being in a co-op.”

In a co-op, shareholders pay for common expenses – such as water, or electricity to run hallways lights and elevators – based on the number of shares their apartment is allocated, not how much they use the utility. This is because co-op boards are required by state law to treat all shareholders equally. 

Think of the water like the elevator. Imagine a parent who lives on the 15th floor and is home all day with small children, taking the elevator up and down a dozen times on the way to the grocery store, the playground, school, and maybe just to kill time on a rainy afternoon. Meanwhile, another neighbor lives on the fourth floor, works long hours and takes the stairs to burn extra calories. Clearly these two people use the elevator differently, but their responsibility for its cost does not change because of it. 

One solution might be to install individual water meters for every apartment, like sub-meters for individual electricity use. But the cost might exceed the benefits. That’s a decision for the board to make.