Do I have to rewire the electricity in my multi-family rental?

Question

Hi all,

I need some advice on how to handle a situation that might require an expensive rewiring of the electricity in our home.

I have a duplex in Queens where I rent out the first floor and live on the second floor with my family. We also have a basement but it's being used as storage and we rarely use it.

A family has been renting the first floor from us for almost a year now. There is only one electric meter for both the first floor and the basement. When they first moved in, we had informed them about the shared meter for both the basement and the first floor, and had offered to pay a percentage of their electric bill every month. They had accepted this work-around. In the past few months, they became unhappy with their electric bill and involved ConED to investigate our home. We now are being forced to rewire the home because it's supposedly illegal to not have separate meter for the basement in this situation.

My questions are:

1) Is it really illegal to not have a separate meter in this case?

2) What else can we do in this situation besides being forced to spend money on the rewiring?

3) I thought about offering to cover electricity within a certain limit and raising the rent, would this be a good solution?

Thanks for reading. Looking forward to your replies!

John Teachout · Answer

Before I made any decisions regarding this, I would get some quotes as to what it would cost to separate the power. It's a little unclear from your post but do you already have 2 meters and the tenants are paying electric for their unit and the basement which isn't theirs? Or is there just one meter for your unit, their unit and the basement?

Also, what is the usage of the basement? Is it potentially a future unit? A shared space with washer/dryer or just storage? If you don't "need" the basement, what if you made that part of the first floor unit and then problem solved.

Jinyu Shao · Answer

Thanks everyone for the input! Really appreciate your insights and advice.

To clarify, the basement unit is not included in the lease, that's why the first floor tenants are asking for a separate meter. We have proposed to reimburse them $50 every month on electricity every month (which IMO is already a lot), but they refused.

It is a legal duplex and I'm guessing the wiring is this way because there was one family living in both first floor and the basement. We are hoping to rent the first floor with the basement after this current tenant moves out, assuming they wont' stay. But if they do, we might will propose a lease that includes electricity with a cap  and raise the rent.

Frank Chin · Answer

I had a few thoughts I was going to add this morning before I saw your post.

First, I'm always worried about the authorities getting involved with illegal units. In the rewiring of the 1950 duplex, I had an illegal unit, though at the time, I didn't know requesting another meter will raise further red flags, till my contractor warned me. To fix all the electrical issues, I had to increase the building from 100amps to 200amps, get updated meters, but also run additional wiring to the upper floors as they didn't have enough outlets. I had to visit a unit once, the tenant had to run an extension cord to the living room from the kitchen to run the AC.  And the extension cord was super hot when I touched it. Some of the outlets did not have the holes in it for the ground, though other were later changed to newer ones with it. Finally, the electric goes off on the second floor sometimes when a large truck rumbles by, shakes the building. I had to go by when it first happened, and found out if I push and pull the wire from the main control panel to the second floor, the electric goes on again. Obviously, the tenant was annoyed and not a good thing to happen.

I got a contractor who's been working the borough for 30 years, knows the ins and outs. To do the job, he had to request 3 new meters from Con Ed, apply for a permit, and on it, describe the scope of work. He suggested dividing the work into two projects, project "1" for replacement of the meters and main panels at the service entrance. This way, Con Ed and Building inspectors would come, go to the service entrance, do their inspection, leave, and no need to wander thru the building. If they asks to, he'll tell them it's beyond the scope of the job. The project 2 would be rewiring the upper floors, and I can choose not to get a permit, though I can request one. Not requesting permits sounds good, but my dad who owns commercial properties tells me contractor tend to be sloppy if you don't. He once went ahead with a permit on a major plumbing job anyway, which the contractor felt was not necessary, was inspected by the city, failed three times because the work was incorrect, and finally had to get someone else doing it right. So he tells me, if it's a big job, don't be cheap, have it checked out, do it right. He was laughing when he told me the contractor tried to BS the inspector the way they BS him, but the BS didn't work on the inspector.

Good thing I did the service entrance. There's a ground wire at the entrance that looked like it's hooked up the main water pipe, and whoever installed it, faked it. There was a wire attached, it ran into a hole in the wall, but not connected to anything on the other side. So all the outlets upstairs were not grounded.

As to Con Ed telling her the first floor and basement need separate meters, that is more or less a zoning issue. For this, she could save herself money and aggravation hiring an expeditor that works the borough, and they deal with zoning issues, to verify it. It would help if she got something in writing from Con Ed, or a citation from the city. I was cited by the city for an illegal unit, and they want me to take down the unit to it's bare walls, and if I want anything built there, submit plans and start from scratch. That'll cost me $30K. But paying the expeditor $1,500 fee, and his having lunch with the assistant commissioner whom he knows, the order was rescinded and the project was finally done for $6K including his fee, as well as $1,400 drafting plans of what's there with minor changes. And fortunately for me, there was a big scandal at the building department when this was going on, all the inspectors in the borough but one was arrested for bribe taking, so everybody had to arrange "self inspection" from someone for the time being, like an architect, which my expeditor is, and send it in, though the city reserves the right to reinspect.

From my perspective, if the basement is empty, or used for storage, it does not constitute a unit requiring a CO and separate meter, unless there's more to the story. Sounds to me like a zoning and CO question, not electrical. My suggestion if the problem is just with the OP's tenant, paying him $20 to $30 a month more is worth it.

Frank Chin · Answer

I didn't mean "newly built" in this way. For instance, in the rewiring job I mentioned, the building was built in 1950, "but when it was newly built", it had 3 meters installed, 2 for each unit and one for the common area. The 3rd basement unit was added in the 1950's using the 3rd meter.

I lived in a gentrifying area, and currently there are a number of duplexes and triplexes built, and duplexes have 3 electric meters out front, and triplexes have 4, so all "newly built" properties are done this way.

However, when I purchase older properties, there are exceptions. I bought a legal triplex, with a CO for 3, yet only had 3 electric meters, not 4. When I checked the building department files, it was originally built in 1939 as a 2 family and retrofitted in the 1940's to a 3, with modifications from a 2 to 3, as an example, installing fire escapes. I checked the files because there were complaints the building was not up to fire codes, the fire escape did not have proper ladders. But I found the fire department and building department signoffs for the electric, fire department signoffs for the fire escapes. Everything was legit. With signoffs, it's grandfathered, even if it doesn't meet current codes.

I looked at hundreds of properties through the years, and seen SFR converted to duplexes, duplexes to triplexes etc. and seen that often when they do this, they don't add another meter for the common area, even when they do it legally. My guess is someone is converting the 2nd floor to a legal apartment, add utilities, electric meters, and don't think ahead where maybe I have to separate out the common areas, as maybe someday, it will be a rental. But then, if you think about it, it's not that necessary, particularly if you credit the tenants the proper amount. I never had a problem with it, in fact some tenants believe they make out ahead of the game. Another problem is this meter will be billed at commercial rates unless the building is owner occupied.

In OP's case, I believe everything is legit, even if she doesn't have 3 meters for the duplex, basement, 1st and 2nd floors. The whole reason for the rewiring is the tenant complains he's gypped. But getting permits (hundreds of dollars) in NYC and hiring licensed electricians is not cheap, particularly if there are cheaper ways to handle. My guess is she'll be out at least $1,500 for the rewiring job, and $20/month electric bills after for an EMPTY basement, or a basement for junk. Now, how silly is that.

Frank Chin · Answer

I own a number of duplexes, most with illegally converted added units, and the entire building is rented out, so it's like want you described, the common area lighting, and the furnace, security camera etc. are attached somewhere. Usually this is the 2nd floor owner unit, but sometimes the basement unit.

Normally, duplexes have 3 electric meters when newly completed, and the basement meter is used for the common area billing. However, most houses, 90% of them, have separate illegally converted basement apartments that uses them. Often the solution is to hook the common area wiring to the owner unit, the 2nd floor. The other is to keep everything hooked to the basement unit with the landlord paying the electric, which is a bad idea as explained below.

I bought some older duplexes and triplexes where I had to up grade the building from 100 amps to 200 amps, and inquired about additional meter for common areas while rewiring and the answer was NO. I had to get permits for the project, and Con Ed and the Buildings Department is quite strict on the number of meters, and inspections are done at project start by Con Ed and Buildings and at the end.

Now, how are the bills allocated. For duplexes with 2 BR, the usual electric bill back then ran $60 to $80 for the owner unit on the 2nd floor that got the common areas connected. I credit them $20 to $30.00 per month and they were thrilled.

Now in OP's case, I find it unusual they have the basement and first floor on one meter, and I have no info of what the legal CO is, though she mentioned it's a duplex. Be that as it may, she says the basement is used for storage, meaning minimal electric use, it makes no sense to pay for a somewhat expensive rewiring job, get an added meter if she can get one, then pay about $20/month for the minimal or zero usage. She could credit the tenant $20 compared to throwing money away to Con Ed, or for good measure, $30.00, and it will be more than fair. At $30.00, it'll cover 40% of the average bill.

I done research on meters for common areas, and when electric is used for common areas and billed to landlords, it's not charged at the lower residential rate, but the higher commercial rate since it's commercial use by the landlord. So from this perspective, it make sense to have the have tenants apply for the accounts paying at the lower rate. Bills are transferred to me during vacancies, and I pay them at the higher commercial rate.

Frank Chin · Answer

I done these projects in NYC, and the owner of a duplex, with a meter for the 1st floor and basement, separately for the 2nd floor will have a hard time getting an additional meter for the basement. I recall they do an inspection when you get a meter and rewiring job, and it will be hard to explain why you need it for the basement where no one lives there, and it's hardly used. It's more likely the owner wants to do an illegal conversion to a basement apartment.

Them saying the first floor and basement should have separate meters is bogus from my experience.

In fact, I got a somewhat similar but reverse problem. Bought a foreclosure with an illegal basement apartment, city found out, declared it illegal, long story, I legalized it as an office, but it has it's own meter. Then several years ago, I had a stroke, haven't used the office, but used it for storage mostly. Problem now is no electric use, but there is a minimum charge of $17 to $21 a month for having the meter and service to the location even if electric use is zero. That's depending the number of days in the month. Every other year, they send me a letter saying they noticed no electric used, is there something wrong? Why don't you disconnect service? I tell them "no, there's only something wrong with me, I can't just get down the stairs". Then they also send inspectors twice, to see that there's nothing funny going on, and I believe they even replaced the meter once in case something is really wrong with the meter.

If Jinyu spend money on rewiring, that won't be the end, she'll get bills for using nothing, and constant questions from the utility what's wrong. If the rewiring project is done, it would be the most useless rehab project ever. The good news is she'll probably be denied another meter.

PJ M. · Answer

Other options which aren't being mentioned here are:

Allow the tenant use of the basement and add it to the lease.  If the basement and 1st floor are wired together and both are included in the lease agreement, then the tenant is responsible fro their use.

When the tenant vacates you have some options.  Rewire to put basement and 2nd floor together, rewire the basement to be metered by itself (so each floor has its own meter) and you just pay for basement and 2nd floor, or the cheapest option is to leave it as is and take the basement + 1st floor unit for you and rent out the 2nd floor unit.

Frank Chin · Answer

@Jinyu Shao

Is the property a legal duplex, i.e. you got a CO for 2 from the building department. I had these projects done, and Con Ed in NY will allow you 2 meters if it's a legal 2, and only a licensed electrician can request one, i.e. the meter, in your behalf. I recall both the city and Con Ed does an inspection, definitely after completion, but also before the start of work in one case. Not sure, recall it also requires a permit.

Best to have a licensed electrician take a look, but look into the CO issue first.

Raul R. · Answer

@Jinyu Shao

I suspect the recent heat waves may have something to do with their high electric bill regardless is the workaround you stated put in a contract or just verbal??

Your cheapest solution is once the lease is up raise rent and include electricity w rent & a cap..

Wesley W. · Answer

This is called "shared metering" and is generally not allowed unless you and the tenant have signed an agreement provided by your utility company.

Unless NYC has its own rules, you should be able to voluntarily put the electric bill in your name to cure any investigation.  This is what they will do anyways, and then backbill you for the use since the beginning of their tenancy.

What I would then do is raise the rent at your first opportunity to compensate for those utilities.  Once this tenant vacates, you would then have the choice to either rewire the building to separate meters, or offer the new tenant a unit with "electric included."

Of course, in the great state of NY you have to make sure you are in compliance with rent control and "just cause" evictions that just passed into law.  Your tenants might be incentivized to stay a long time with minimal rent increases and you paying their electric use in perpetuity.

Do I have to rewire the electricity in my multi-family rental?

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