Lease Land Question

[Howard Klahr]

whereas in a co-op you only have an interest in the improvements by virtue of stock.

This is not entirely correct. The stock ownership is in the corporation that owns the overall property. However, the individual units owners also have a "proprietary lease" for the individual unit. The lease represents an interest in the real estate.

 

[Carnivore]

This is not entirely correct. The stock ownership is in the corporation that owns the overall property. However, the individual units owners also have a "proprietary lease" for the individual unit. The lease represents an interest in the real estate.

Howard,

Help me out here a little bit. I took the AI condo & co-op class.

I understood the stock to be the actual ownership interest of the overall property and the proprietary lease defined what you as an individual stock holder had actual use of and the terms and conditions of that use to remain a stockholder.

I dont quite understand what you mean by the "lease represents an interest" in the real estate?

I am a little confused, but I may actually understand it. Your words may have threw me off a little. Did you mean a specific partial interest as a portion of the share holders general interest?

FTR, we only have two residential Co-ops in all of Charlotte, NC. I met one of the share owners of one co-op in the AI class, He was an MAI and very nice fellow.

 

[Terrel L. Shields]

I don't know who the guy was who came up with the idea of a 99 year lease. But he was a knucklehead. They are a very annoying problem is a few areas I work. In one case, the "owner" tries to buy back any vacant lot under lease and simply deeds over the improved lots to the current occupant. There are about 20 years left on the leases and his standard offer is $500 or so. Many with houses have had problems trying to refinance.

 

[Howard Klahr]

Carnivore

A co-op is a multi unit project owned by a corporation whereby individual unit owners have shares in the corporation as well as a proprietary lease. The corporation owns the property however ownership of shares of stock are no more an interest in real estate than are owning shares of stock in say General Electric or 3M. The lease is what creates a real estate interest (i.e. leasehold estate).

Co-op corporate documents typically restrict holders of proprietary leases to be only owners of stock in the corporation. In fact, sales of co-op interests are often not recorded in public records because the represent transfers of stock not deeds.

 

[Carnivore]

Howard,

Page 9, section 5 of the bylaw is a very interesting provision. I remember we had a discussion about how Fair Housing does not apply to CO-OPs in my class.

For other form readers without getting into details a co-op can discriminate.


Thanks for the docs. good educational material. It was clear to me once I read through the docs that proprietary lease makes all the sense in the world.