In your condominium, there are professional or commercial units that have a 19% common interest and vote but pay only 10% of the building expenses. Is this fair? Is it legal? Well, maybe. It is governed by statute and your by-laws and declaration. Here are the basic rules.

In mixed-use condominiums – those that have commercial, professional office, community facility or other units in addition to residential units – we frequently see a special allocation of building expenses that does not match the common interest assigned to the units. Certain expenses – staff, utilities, equipment maintenance or repair – may not be allocated to commercial and professional units, or may be allocated in smaller percentages than those units' common interest. The special allocation is usually discussed in the offering plan and projected first year's budget of the condominium and is generally explained to be the result of those units making less use of the staff, utilities, equipment or other specially allocated expenses. The accounting for the special allocations can be difficult, and subject to dispute, especially if uses or expenses change over time. The documents of older condominiums, especially, may provide less than clear or legally effective guidance for such special allocations.

The validity of a special allocation in your condominium depends principally on a statute, Section 339-m of the Real Property Law, and the specific provisions of your condominium's declaration and by-laws. Providing for special allocation only in the offering plan is not sufficient, though the explanations in your offering plan may come into play if your declaration and by-laws allow such special allocations, but are unclear as to how to do so.

Section 339-m, which applies to all condominiums in New York State, requires building expenses (except insurance expenses) to be allocated according to common interest except in three circumstances: (i) if authorized by the by-laws and declaration, the Board of Managers may specially allocate expenses to nonresidential units, (ii) if authorized by the by-laws and declaration, the Board of Managers may specially allocate expenses based on special or exclusive use, control or availability of particular units or common areas, and (iii) if authorized by the by-laws and declaration, in buildings with income-regulated units expenses may be specially allocated to comply with the income regulations applicable to such units. In addition, the statute requires that special allocations be disclosed as a "Special Risk" in offering plans promulgated after 2005, or by amendment to active plans promulgated prior to 2005.

Thus, any special allocation of building expenses must be authorized by the declaration and by-laws and the special allocation must be disclosed as a Special Risk in the offering plan. If these requirements are met, you must then look to the specific provisions of your building's by-laws and declaration to determine what special allocations are authorized. Assistance of your counsel, management company and accountant may be necessary because the language of by-laws and declarations vary from condominium to condominium, the categories of expenses that may be specially allocated are unlimited, and the uses and demands on building facilities of commercial units may vary over time.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.