Rules for using cooperative housing corporate equity

(a) The corporate equity shall not be used for distribution to members, but only for the following purposes, and only to the extent authorized by the board, subject to the provisions and limitations of the charter of incorporation and bylaws: (1) For the benefit of the corporation or the improvement of the real property, including its use as collateral for loans. (2) For expansion of the corporate equity by acquisition of additional interest in real property for purposes consistent with its charter. (3) For public benefit or charitable purposes. (b) Upon sale of the property, dissolution of the corporation, or occurrence of a condition requiring termination of the trust or reversion of title to the real property, the corporate equity shall be required by the charter, bylaws, or trust or title conditions to be paid out, or title to the property transferred, subject to outstanding encumbrances and liens, and the transfer value of membership shares, for use for public or charitable purposes. (c) The membership shares and cooperative fees are interests in real property for purposes of: (1) Cooperative housing corporations under section 216 of the federal Internal Revenue Code of 1954, as amended; and (2) Exemption from state general excise tax under section 237-24(16).