Definition of "Proprietary lease"

Adrean Hayashi real estate agent
Adrean Hayashi, Real Estate Agent Magnum Opus Real Estate

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.

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