Co-op proprietary lease and offering plan, explained

updated 2026-11-11

A proprietary lease is the long-term lease a co-op gives each shareholder for their apartment; with your shares, it is what you own when you buy a co-op.#

Last updated: 2026-11-11. General information, not legal, tax or financial advice. Rates and rules change, so confirm the numbers for your deal with your real estate attorney and lender.#

The short answer#

When you buy a co-op you get two things: shares in the corporation that owns the building, and a proprietary lease that gives you the right to live in one apartment. The lease sets your obligations as a shareholder-tenant: paying maintenance and assessments, following the house rules, getting consent before you sublet, renovate or sell. It runs alongside the corporation's by-laws (how the board is elected and makes decisions) and house rules (day-to-day conduct). The offering plan is the disclosure document filed with the New York Attorney General when the building became a co-op or condo. Your attorney reads all four before you sign a contract.#

Document	What it is	What your attorney reads it for
Stock certificate#	Proof you own a set number of shares	Number of shares, which sets your maintenance and any flip tax per share
Proprietary lease#	Your right to occupy the apartment, and your obligations	Sublet, alterations, assessments, pets, lease term, transfer fees
By-laws#	Rules for running the corporation	Board powers, voting, how documents can be amended
House rules#	Day-to-day rules set by the board	Renovation hours, move-ins, pets, use of common areas
Offering plan and amendments#	The original disclosure filed with the Attorney General	Building history, land lease, sponsor's unsold shares, special risks

What is a proprietary lease?#

The proprietary lease definition, in plain terms: a lease between the co-op corporation (the landlord) and you (the shareholder-tenant) for a specific apartment, granted because you own the shares allocated to it. You do not own the apartment itself. You own shares, and the shares carry the lease. Sell the shares and the lease goes with them; the building's consent is usually required for both.#

Most co-ops use one form of lease for every apartment, written when the building converted and amended since. Amendments usually need a vote of shareholders, so the lease you sign may come with a stack of amendments. Read them together.#

A co-op proprietary lease is also what your lender relies on. A share loan is secured by your shares and the lease, and the co-op signs a recognition agreement with the lender at closing. Lenders that sell loans to Fannie Mae need your right to occupy to last at least until the loan matures, either through the lease's own term or a renewal provision. Habitat reports that most proprietary leases run at least 50 years, but the clock started when the lease was first signed, so an older building's lease can end before a new 30-year loan does. Renewing it usually takes a shareholder vote. A lease that expires soon is something your attorney and lender will flag.#

What your attorney reads the lease for#

Clause	What to look for
Subletting#	Whether you can rent the apartment out, for how long (for example two years out of five), the fee, and whether each tenant needs board approval
Transfer fee (flip tax)#	The amount and how it is computed, and whether the seller or buyer pays. See the flip tax guide
Assessments#	The board's power to charge special assessments on top of maintenance, and any assessment already announced
Alterations#	What needs board consent (moving walls, plumbing, wet over dry), the alteration agreement, required deposits, and who pays the building's architect to review plans
Pets#	Whether pets are allowed, and any limits on type, size or number. These may also be in the house rules
Lease term and renewal#	When the lease expires and how it is extended
Maintenance#	How it is set (usually by shares), and whether the board can add a surcharge
Default and termination#	What happens if you stop paying or break the rules, including the co-op's power to terminate the lease
Repairs#	Which repairs are yours (inside the apartment) and which are the co-op's (structure, building systems)
Sale#	Board consent to a sale, and any right of first refusal

Two items sit outside the lease but come up in the same review:#

Underlying mortgage. The co-op usually has a mortgage on the whole building. Its size, interest rate and maturity date matter, because a balloon payment or refinance at a higher rate goes straight into maintenance. The building's audited financial statements show it.#
Land lease. If the co-op does not own its land, the ground lease and its expiry date affect financing and resale. The offering plan and financial statements disclose it. The condop guide covers land-lease buildings.#

Stock, by-laws and house rules#

Shares. Each apartment is allocated a number of shares, usually based on its size, floor and features when the building converted. Your shares set your maintenance and, in some buildings, your flip tax. Maintenance, assessments and voting rights generally follow shares, or another basis the co-op's documents allow; New York's Business Corporation Law §501(c) sets out what bases are permitted.#

By-laws. The by-laws set how many directors sit on the board, how they are elected, how meetings run, and what votes are needed to change the corporation's documents. Read them for how much power the board has without a shareholder vote.#

House rules. The board can usually adopt and change house rules without a shareholder vote. They cover renovation hours and seasons (some buildings stop renovations in summer), move-in fees and deposits, pets, laundry, storage, bikes and noise. Changes are common, so ask for the current version.#

What is an offering plan in NYC?#

When a building is sold as co-op or condo apartments for the first time, the sponsor (the developer or converting owner) must file an offering plan with the New York State Attorney General before making any offer. The requirement comes from General Business Law §352-e, and the Attorney General's Real Estate Finance Bureau reviews the filings. The plan describes the building, the sponsor, the finances, the proposed budget, the units for sale and any special risks. Each later change is filed as an amendment.#

For a resale co-op, the original offering plan can be decades old, but it still answers useful questions:#

whether the building sits on leased land#
how shares were allocated to each apartment#
whether the sponsor or a holder of "unsold shares" still owns apartments, and what rights those apartments have (often freedom to sublet without approval)#
the special risks disclosed at the time#

The amendments show what has changed since: budgets, sponsor holdings, closings.#

Where to get these documents#

Document	Where
Proprietary lease, by-laws, house rules#	Seller's attorney or the managing agent, usually in the due diligence package
Audited financial statements (2–3 years)#	Managing agent
Board minutes#	Managing agent; your attorney reviews them, sometimes in person
Offering plan and amendments#	Managing agent or seller; the Attorney General's Real Estate Finance database lists filings, and copies of documents not posted online can be requested under the Freedom of Information Law

The managing agent may also fill in a due diligence questionnaire from your attorney: flip tax, sublet policy, pending assessments, litigation, commercial leases.#

All of this happens between accepted offer and contract signing. The guide to buying an apartment in NYC puts it in order, and the co-op vs condo guide covers how the condo equivalents (declaration, condo by-laws) differ.#