Which lease is commonly issued by the corporation that owns a corporate apartment building?

• A. Escalated Lease
• B. Proprietary Lease
• C. Ground Lease
• D. Reappraisal Lease

Answer: (B)

In a cooperative housing setup, ownership is by shares in the building’s corporation, not by owning an individual unit outright. The corporation issues a proprietary lease to each shareholder, giving them exclusive rights to occupy a specific apartment for a set term while they remain a shareholder and pay maintenance assessments. This arrangement, unique to co-ops, links occupancy to the corporation rather than to a traditional landlord-tenant relationship, which is why a proprietary lease is the standard instrument.

Escalated leases focus on rent increases over time, which isn’t about how ownership and occupancy are structured. A ground lease involves leasing land itself for a long period, with buildings often owned by others, and is not the common form for a corporate-owned apartment building. A reappraisal lease isn’t a standard term used in residential cooperatives and doesn’t reflect the cooperative ownership model.