What does a proprietary lease allow a shareholder to do in a cooperative?

A proprietary lease is a unique feature of cooperative housing. It is the legal agreement that grants a shareholder the right to occupy a specific unit within the cooperative. When someone purchases shares in a cooperative, they are not purchasing real property in the traditional sense but rather acquiring shares that entitle them to a leasehold interest in the unit. This means that while they hold a portion of company ownership and have a say in its governance, their primary right and benefit is the ability to live in and occupy the unit allocated to their shares.

This arrangement emphasizes the distinction between ownership of shares in a corporation (the cooperative) and actual ownership of real estate. Additionally, the proprietary lease typically outlines the terms of use and responsibilities of the resident, including maintenance obligations, along with the duration of their rights to occupancy as long as they adhere to the cooperative's rules.

The focus here is on the occupancy rights granted to shareholders, as these rights form the basis of living arrangements in a cooperative, distinguishing cooperatives from other forms of real estate ownership, such as condominiums or traditional rental agreements.