A proprietary lease is the long-term lease between a NYC co-op corporation and a shareholder that grants the shareholder the exclusive right to occupy a specific apartment in the building. Shareholders do not own real estate in a co-op. They own shares in the corporation that owns the building, and the proprietary lease converts those shares into the right to live in a particular unit.
The lease defines maintenance charge obligations, house rules, subletting policies and fees, alteration approval requirements, pet policies, insurance requirements, and the grounds on which the co-op can terminate the lease, including unpaid maintenance, illegal activity, or objectionable conduct. It works alongside two other core co-op documents: the certificate of incorporation and the by-laws. Most NYC proprietary leases run 50 to 99 years and are automatically renewed. Lenders require an assignment of the proprietary lease as part of every co-op financing transaction.
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