The Proprietary Lease
The proprietary lease is the mother of all co-op documents.
This document is a "lease" executed between the co-op and each shareholder with respect to the particular apartment that the shareholder will inhabit. This document governs all aspects of the relationship between the co-op and each shareholder. As I discuss in "The Great Co-op Secret", the relationship between the co-op and the shareholder is that of landlord and tenant. Why is the proprietary lease so important? There are a myriad of issues that the proprietary lease governs, Some examples: a shareholder's right to sublet his or her apartment or assign (that is, sell) the shares; a shareholder's right to mortgage; who may lawfully occupy an apartment; what constitutes a default by a shareholder under the proprietary lease; the co-op's right to terminate the lease; who is responsible for maintenance and repair of a unit; the right to impose monthly maintenance charges; and numerous other issues that impact your ownership of your apartment. Older proprietary leases, let's say more than 25 years old, can be inadequately drafted, so that many unanticipated issues that now confront a co-op are not addressed in the lease. More recently drafted leases attempt to resolve some of the trouble spots, but it is difficult to solve all human interactions in a document. The best example of this problem relates to the individual owner's obligation to make repairs. The general rule used to be that everything from the walls into the infrastructure of the building was the cooperative's problem, and everything from the walls into the owner's apartment was the responsibility of the apartment owner. This general rule can be difficult to apply: Let's say that a pipe bursts inside a wall.
Who's Responsible for What?
Generally, it's the co-op's responsibility to open the wall, fix the pipe and close the wall. Most co-ops will not take responsibility for repairing or replacing the wall covering or for repainting. The co-op will only return the wall to a "paintable" surface. If you have expensive wallpaper on that wall, it could get costly to replace or match something that's five years old. According to most proprietary leases, or the interpretation of same, that's not the co-op's problem. Another repair that causes great misery is a defective "shower pan". Each shower has a rubber membrane underneath the tile floor of the shower to insure that water goes down the drain and not into the apartment of your neighbor below. Sometimes these pans are defective or outlive their useful life. That requires the shower floor to be opened up and the shower pan replaced. I've seen a co-op argue that replacement of the shower pan is the shareholder's responsibility. Many times the co-op will tell the shareholder to look to the prior owner of the apartment for the faulty construction, but in almost all cases, the prior owner's responsibility ended with the closing.
For more on this issue and on co-ops in general see “Co-ops 1.0”