Congratulations! You have taken the plunge and bought into a coop or a condo building. The next question is, what documents govern your rights and actions as well as those of your fellow shareholders or unit owners? Coops and condos each have two main governing documents. For a coop, they are the by-laws and the proprietary lease between the corporation and each shareholder, and for a condo, they are the condominium declaration and by-laws. Additionally, both coops and condos have rules and regulations, occasionally referred to as house rules that govern the quality of everyday life in the building.
The coop proprietary lease creates a landlord-tenant relationship between the coop and its shareholders, as they do not own the real property they occupy. The proprietary lease also governs maintenance and repair obligations, along with the rules of tenancy, including permitted uses, subletting, alterations and transfers. Every shareholder in a coop gets the same proprietary lease. Where the proprietary lease governs shareholder behavior, the by-laws cover issues of corporate governance: elections and meetings of the shareholders and board of directors and the scope of the board’s powers. By-laws typically also cover issues relating to shares, apartment sales and transfers, and building improvements and repairs.
For a condominium, by-laws serve the same function as they do in a coop. The declaration, similar to a proprietary lease, defines and governs the rights and obligations of the condominium association and the unit owners relating to use of units and the common areas. The deed to a condominium unit incorporates the declaration by reference. As a result, when a unit owner takes title to a unit, she also agrees to be bound by the terms of the declaration, which must be filed with the clerk’s office of the county in which the building sits.