What does the term "proprietary lease" refer to in cooperatives?

The term "proprietary lease" specifically refers to an arrangement in a cooperative housing setting where a shareholder is granted the right to occupy a specific unit in the cooperative building. This type of lease is unique to cooperatives because, rather than owning real property outright, residents purchase stock in the cooperative that entitles them to this lease.

In this arrangement, the proprietary lease outlines the rights and responsibilities of the shareholders regarding their occupancy of the unit. It typically includes details such as maintenance responsibilities, occupancy rules, and the duration of the lease. This lease does not confer ownership of the physical unit itself but is tied to the ownership of shares in the cooperative corporation.

Understanding the concept of a proprietary lease is crucial when it comes to cooperative living, as it differentiates cooperatives from traditional ownership models where individuals own their properties directly.