higher floor maintanace- a formula?

I believe COOPs allocate more shares for the same space, the higher you go.

oo7 - don't know if the board can arbitrarily change the number of shares of each unit. You really have to check the prospectus - doubt if this can be done - might be considered self-serving by some board members and therefore subject to challenge.

It will definitely be difficult to implement because it does favour some shareholders over others. One thing might be to implement the increases unit by unit as they are sold but this will still be heavily opposed by the current owners because it affects the marketability of the units. The only way to pull this off would be to convince everyone that there was an error in the original methodology. Not sure that an oversight would constitute an error.

i would urge leaving this alone. will only create a mountain of ill will amongst your small group and there is no way to expect a fair outcome.

Can we reallocate shares through a board's decision although the original plan is from the 80's? Can a board, by consent from all, change the original documents? obviousely in our case the upper floors have more windows, better views etc. The lower floors have only front and back windows. I believe some members of the group (of owners), realize the lack of fairness in the current structure. Additionally, EE Tax is allocated by the number of shares (all units have the same allocation). It can be argued that charging each unit the same amount of R.E tax is unfair since the value of each unit is different. Would such an arguement stand in court?

The shares were allocated by the sponsor. The offering plan will include a statement by a third party saying the share allocation was reasonable. It's pretty rare to have shares not go up by floor. I've noticed it in a few side-street loft-ish buildings.

While reallocation may be technically possible, it's unlikely all the shareowners would agree to it, for the reasons mentioned.

Reallocation results in alteration of ownership interests in the corporation. Anyone who has less shares at the end essentially owns less and those owning more own more. That was not the deal people made when they purchased under the offerring plan, etc. The board cannot just change allocation of shares by a vote. I suppose upon consent of all shareholders and with proper votes and filings with the state it may be possible, but I have never heard of it. RE legal counsel would have a reasonably quick answer to this I would think.

Think about this: if a billionaire moved into the penthouse, what would stop the other shareholders and board from all agreeing that the PH would carry 99% of shares and everyone else just 0.12%. Everyone would owe 20 cents a month and the PH would owe $190,000/month. Hey, sounds good to everyone unless you are the PH owner. The law prohibits such actions for good reason.

Hard to see how you'll convince the people who need to pay more to vote for higher share % and higher common charges and taxes?

"Reallocation results in alteration of ownership interests in the corporation" This sounds like something that could be taxable as well. Not in the sense 007 refers to tax above (allocation of RE tax), but as a gain on the part of the parties receiving additional shares. It would be a pretty special outcome for the high floor folks to have their maintenance go up and also have phantom income on a deemed gain from being allocated additional shares. I am not a tax professional so I don't know that this would be the outcome, but I do know enough to say that someone contemplating this should ask the question. All that said, this discussion is moot because there is no way this will be a board decision and it will only take one dissenter among the shareholders to block it. No one is going to volunteer to recut the deal that they signed up for when they bought into the building to their detriment.

I don't understand how you gain by receiving additional shares.

If the co-op disbanded and sold its land, you'd get more when the proceeds were divvied up.

Again, unlikely to happen, but the co-op docs do address the possibility.

Unlikely you could get a consensus to do this. I would recommend trying to implement a flip tax based on % of sales price as this would benefit the building and those with more valuable units would pay more on exit.

You can write off a higher amount but it's not a dollar for dollar write-off so there is definitely no gain.

Our coop did hope reassess one or two units' share ownership at one point but it was because they discovered that over the years they secured exclusive use of outdoor space which was classified as common area in the offering plan. The units in question had sold several times over the years with the outdoor space as part of the package and it was agreed that it was not fair to penalise the current owners who bought the units in good faith. The intention was to advise those owners that upon a sale their share allocation would be going up and therefore they should advise any potential buyers of the higher maintenance. Not sure if this plan was actually seen to completion though.

Gotcha with the disbanded thing. I would take my chances and want less shares for the immediate gain of having less maintenance.

"Gotcha with the disbanded thing. I would take my chances and want less shares for the immediate gain of having less maintenance" Of course. Which is the exact reason that the neighbors on the other side of the reallocation aren't going for this idea when it comes to a vote.

Could you imagine a 10 story building voting on this thing?
Floors 1 thru 4 voting yay and floors 6 thru 10 voting nay up to floor 5 who would basically be smack in the middle and most monetarily unaffected the deciding vote.

I was referring to this and must be misreading it.

"Reallocation results in alteration of ownership interests in the corporation" This sounds like something that could be taxable as well. Not in the sense 007 refers to tax above (allocation of RE tax), but as a gain on the part of the parties receiving additional shares. It would be a pretty special outcome for the high floor folks to have their maintenance go up and also have phantom income on a deemed gain from being allocated additional shares.

Are you saying that there is a taxable gain on the additional shares?

And then the difference in maintenance wouldn't be enough to make the brouhaha worth it. In my co-op I've got one-half of one percent fewer/more shares than the apartments above and below.

Let's pretend each share corresponded to a dollar in maintenance for those nine apartments, and shares were reallocated to a more-normal pattern:

1000 1020
1000 1015
1000 1010
1000 1005
1000 1000
1000 995
1000 990
1000 985
1000 980

Not worth the trouble.

I guess it depends on the building. There is a big difference in shares in my building.

I am not sure why anyone assumes that the "fair" allocation od maintenance should reflect the value of the unit. You are too used to the underpinning of our broken system of taxation. A unit of the same size does not present any greater burden to the building simply because it is worth more (should you also reallocate if someone renovates their unit?) But, this has been the consensus in NYC for some time, but it is not necessarily fair nor based on anything other than the whomever has more must pay more theory.

You definitely will not be able to do this without, at a minumum, a vote of a supermajority needed to amend the plan. I suspect that the plan itself requires the affirmative vote of the affected units to change their ownership rights in the corporation, so there is no hope of doing this.

I would assume because in theory, the higher up the more valuable. The more valuable, the more they can get in rent. Assessed value is based on comparable rents. Tax is based on the assessed value.

Most co-ops were converted from rental buildings, with the first chunk of purchasers being resident tenants buying at a fixed price per share.

The share allocation not only had to meet some third party's approval as "reasonably reflecting the respective values of the apartments", it also had to jibe with the insiders' opinion of relative values. Imagine the squawk if 3A was expected to pay the same purchase price as 13A, and the same maintenance.

Not that there haven't been oddities in share allocation, but not too blatant with the insiders looking over the sponsor's shoulder.

Thanks to all of you out there. Your comments were helpful and highlighted the complexity of the matter for a small coop which has been in existence for many years. Although from a RE "assessed value" of each apartment there should be a differential value assigned per floor, the complexities involved would suggest dropping the issue. Have a peaceful year and a peaceful coexistence with you neighbors (either in a rental or a coop/condo).

In Coops. share allocation must simply be "rational and reasonable". the Sponsor gets a letter attesting to the "reasonableness" of the allocations made which is in the Offering Plan. After a certain date (I forget exactly what the date was) Percent of Common Interest allocations in Condominiums must me made ad valorum (i.e. indirect proportion to the original price on the Schedule A).

in general, Coop Shares can be reallocated but require a vote of a super majority of the shareholders. I do not think ALL shareholders must consent. Unfortunately, as unfair as it sounds, the scenario KW describes with the rich PH owner is probably possible; think about the Pullman ruling, and how it can be used in small buildings to basically "steal" an apartment a large, powerful shareholder might have over a small one.