The proprietary lease definition is the occupancy agreement between the cooperative corporation and the shareholder for the possession of a unit by means of cooperative shares.
In order to explain what a proprietary lease actually is one has to understand first that this is not a real estate purchase. If it can be compared to anything it would have to be compared with renting.
The proprietary lease is, first of all, a lease. This lease is a contract in itself that is made between a corporation and the homebuyers. It is given to a homebuyer who joins a housing cooperative as shares in that corporation. It gives the homebuyer the right of occupancy for a particular unit by purchasing shares in that corporation and not acquiring actual real estate. The one purchasing shares becomes a member of their housing cooperative and are at the same time tenants and landlords because of their shares.
A proprietary lease real estate is used in place of a deed. Through a proprietary lease, it explains each right and privilege in regards to a residential unit. It covers rights of occupancy and/or right to sublet, charges, right to mortgage and the corporation’s right to terminate the lease.