Which statement is true about a cooperative?

Which statement is true about a cooperative?

• A. A cooperative may hold an owner liable for the unpaid operating expenses of other owners.
• B. The owners have a fee simple interest in the airspace of their respective apartments.
• C. Owners may retain their apartments even if they sell their stock in the cooperative.
• D. The proprietary lease is guaranteed to have a fixed rate of rent over the life of the lease term.

Answer: (A)

In a cooperative, you don’t own a separate unit of airspace or a fee simple interest. Instead, you own shares in the corporation that owns the building and you hold a proprietary lease for your specific unit. The cooperative’s finances are shared among all shareholders, funding operations through maintenance charges that cover the building’s operating expenses. If one owner doesn’t pay, the cooperative can address the shortfall through mechanisms like assessments that spread the burden across all shareholders. That means an owner can be held liable for the unpaid operating expenses of other owners, because the building’s financial health rests on collective responsibility. The other choices don’t fit the structure: you don’t own airspace in fee simple, selling your stock typically transfers both stock and the lease rather than letting you keep the apartment, and the proprietary lease isn’t guaranteed to have a fixed rent for the entire term.

In a cooperative, you don’t own a separate unit of airspace or a fee simple interest. Instead, you own shares in the corporation that owns the building and you hold a proprietary lease for your specific unit. The cooperative’s finances are shared among all shareholders, funding operations through maintenance charges that cover the building’s operating expenses. If one owner doesn’t pay, the cooperative can address the shortfall through mechanisms like assessments that spread the burden across all shareholders. That means an owner can be held liable for the unpaid operating expenses of other owners, because the building’s financial health rests on collective responsibility. The other choices don’t fit the structure: you don’t own airspace in fee simple, selling your stock typically transfers both stock and the lease rather than letting you keep the apartment, and the proprietary lease isn’t guaranteed to have a fixed rent for the entire term.