The situation described is one building. Building code refers to them as "multiple single family dwellings". In order to be considered 2 buildings, they would need to have a fire wall between them. i.e. block wall. Not a fire partition which would be 5/8 gypsum, etc.
As far as how to deal with it with utility and inspector, I don't know. I'd fight with the utility. Ask to talk to a supervisor, and then their supervisor. Send a registered letter and get a written response. Tell them your attorney will be fighting them. Often, I get different answers from different people in the same utility. In MA, you would have some ground to stand on with inspector as there is a provision for not increasing the magnitude of an existing violation. Separate ownership makes this situation difficult. If neither owner will cooperate, there is no way to make this completely legal. You can't group the disconnects if one party resists.
