What does a proprietary lease provide to a shareholder?

A proprietary lease is a legal agreement that grants a shareholder in a cooperative housing arrangement the right to occupy a specific unit within the building. This type of lease is unique to cooperatives, where the residents do not own their individual apartments outright but rather hold shares in the cooperative corporation that owns the entire property.

By holding this lease, the shareholder secures the right to live in their designated apartment. This right is typically subject to the terms of the lease and any regulations imposed by the cooperative board. The proprietary lease allows the shareholder to enjoy all the benefits of residency, such as using the space as a home, while adhering to the rules set forth by the cooperative.

While there may be options for management and improvement of the apartment, those rights are often governed by the cooperative's regulations and do not come automatically with the proprietary lease. Additionally, the right to sell the apartment does not pertain directly to a proprietary lease because the shares in the cooperative may be subject to specific sale conditions and board approval. Thus, the correct understanding of a proprietary lease focuses primarily on the occupancy right it bestows upon shareholders.