What type of lease does an owner of a cooperative hold?

The correct answer is that an owner of a cooperative holds a proprietary lease. In a cooperative housing arrangement, residents do not own their individual units in the same way they would in a traditional real estate ownership model. Instead, they own shares in a corporation that owns the entire property. The proprietary lease grants the shareholder the right to occupy a specific unit within the cooperative. This type of lease is distinct because it combines elements of ownership and tenancy—shareholders have control and decision-making power in the cooperative while enjoying the benefits of living in a specific unit.

This lease structure underpins the cooperative concept, allowing residents to work collectively while maintaining their personal housing arrangements. The proprietary lease is specifically tailored to the cooperative model, as it aligns the rights of residents with their ownership stake in the cooperative corporation.