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A proprietary lease is a written lease for a cooperative apartment whereby residents buys a share of the ownership and then given the right to occupy a particular unit from the corporation that owns it.
This is without doubt a different type of ownership arrangement compared to the typical lease and the landlord-tenant relationship.
The reasons why developers go for these types of structures come down to reducing their own exposure to risks that comes with their investment.
This way, the risks involved can be diversified with the owners that end up as residents.
When residents become stakeholders, they can also be more responsible in living in the premises due to the ownership status.
When such an apartment is sold, the proprietary lease would be assigned to the new buyer and the share certificate would be transferred as well.
There are however, disadvantages for buying into these types of real estate just to become “tenants”.