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Q&A: Bilked by Bulk Billing

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Q. The bylaws of [my co-op] currently charge utility costs—water, sewer, heat/AC, and electricity—to our shareholders on the basis of the number of shares each unit is assigned. The shares apportioned are variable depending on unit size, location, etc.

A year or so ago we negotiated a building-wide cable and internet deal with a provider that is based on the number of units in the building, 240. When individual units are charged, it is on the basis of shares, which results in the per-unit cost varying widely. The board considered proposing a change to the bylaws to permit charges such as these to be done simply on a per-unit basis versus a share basis. As you can imagine, those that were paying less were opposed; those paying more were for.

My question is: Is there a standard practice in NY for charges such as internet and/or cable? Clearly when the original bylaws were developed 50-plus years ago, internet and cable did not exist.

                   —Looking for an Even Split

A. “It is not uncommon for co-ops and condominiums to have a ‘split’ billing system for services like cable TV and internet,” says Aaron Shmulewitz, partner at Belkin Burden Goldman, LLP, in New York City. “Many buildings enter into a ‘bulk billing agreement’ with a provider, in which the building pays a flat monthly bulk amount for basic service with a minimum number of apartments guaranteed, with premium services billed to each apartment owner separately, depending on the level of premium service (s)he desires. In doing so: (i) the flat monthly bulk amount is included in the building’s operating expenses, which are spread among the apartment owners on a per share basis (or common interest percentage basis in condos), so that larger apartments will generally pay more than smaller ones, and (ii) each apartment owner pays for his/her own premium service separately, directly to the service provider.”

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Comments

  • I do not believe that the answer is completely correct. The Agreement usually guarantees a minimum number of apartments to have the basic service (as stated), any fall short is then the Coop's responsibility to pay; BUT Service Providers Refuse to give to the Coop the names/apartment numbers information on who is signed up. There is also no way for the Coop to tell shareholders that they must report to the Coop what type of service they have and who is their service provider. Why are the shareholders/apartment not being billed directly by the service provider. The other catch is that when shareholders upgrade their service they are taken off the 'bulk rate', which then leaves the Coop in a blind to pay for the shortfall for the remainder of the contract term. What happens when a new service provider requests to provide service in the building(s) ?