What is a proprietary lease?

A proprietary lease is a unique type of lease associated with cooperative housing arrangements. When an individual purchases shares in a cooperative, they are not buying real estate in the traditional sense; instead, they acquire a share of the corporation that owns the property. This share ownership comes with a proprietary lease, which grants the shareholder the right to occupy a specific unit within the cooperative for an indefinite term as long as they adhere to the rules and policies of the cooperative.

This arrangement differs significantly from standard rental agreements or temporary leases, where tenants have broader rights under a landlord-tenant relationship without the responsibilities of ownership. In a cooperative, the proprietary lease establishes a long-term, exclusive right to occupy the apartment, subject to the cooperative's bylaws and regulations.

The other options do not capture the specific nature of a proprietary lease. A temporary rental agreement refers to shorter-term obligations, a government-issued land grant relates to public land allocations, and a lease permitting unrestricted subletting doesn't encapsulate the essence of cooperative ownership and control inherent in a proprietary lease. Thus, the uniqueness and specific context of cooperative living make the exclusive long-term lease given to a resident in a cooperative the correct classification as a proprietary lease.