In a cooperative ownership, what do shareholders actually own?

• A. Shares of stock
• B. Their unit
• C. The entire building
• D. A proprietary lease

Answer: (A)

In a cooperative ownership arrangement, shareholders own shares of stock in the cooperative corporation that manages the property. When individuals purchase a unit in a cooperative, they do not own the property itself. Instead, they buy shares that entitle them to occupy a specific unit within the building.

This structure distinguishes cooperatives from other forms of real estate ownership, such as condominiums, where buyers own the title to their particular unit as well as an undivided interest in the common areas. In a co-op, the corporation holds the title to the entire property, and each shareholder's ownership is represented by their stock in the company.

The proprietary lease that a shareholder receives grants them the right to live in and use their designated unit but is not considered ownership of the unit itself. Thus, while shareholders have rights associated with their shares and can benefit in various ways from the cooperative, their actual ownership lies in the shares of stock they hold.