The Building Societies (Syndicated Lending) Order 1995

Modification of Part III of the Act

5.—(1) Part III shall apply to a society’s participation under section 14A in syndicated lending with the modifications set out in this article.

(2) Section 10(1) shall have effect as if instead of subsections (1) and (2), the section provided that—

(a) an advance made by a society by virtue of its participation in syndicated lending under section 14A were an “advance secured on land” for the purposes of Part III;

(b) a society may (in England and Wales or Northern Ireland) hold land with the right of foreclosure, for the purpose of its participation under section 14A in syndicated lending; and

(c) in relation to an advance made by a society by virtue of its participation in syndicated lending under section 14A a reference to the land which is to secure an advance or on which an advance is secured were a reference to the estate or interest or heritable security or title which constitutes or will constitute the appropriate security within the meaning of article 3 above.

(3) Section 11(2) shall have effect as if—

(a) for subsection (2)(c) and (d) there were substituted—

“(c) the amount advanced will be appropriately secured for the purposes of section 14A(2)(a); and

(d) subject to subsection (5) below, no other mortgage of the land which is to secure the advance is outstanding in favour of a person other than the society (meaning the society as sole or joint mortgagee or trustee for itself and others) or a person holding it on trust for the society (as sole beneficiary or one of joint beneficiaries).”;

(b) the reference in subsection (2) to the time when the society makes the advance were a reference to the time at which it must be satisfied in respect of the requirements of article 3(5) to (7) above;

(c) for subsection (4)(c) and (d) there were substituted—

“(c) is satisfied the amount advanced will be appropriately secured for the purposes of section 14A(2)(a); and

(d) is satisfied that no, or no more than one, other mortgage of the land which is to secure the advance is outstanding in favour of a person other than the society (meaning the society as sole or joint mortgagee or trustee for itself and others) or a person holding it on trust for the society (as sole beneficiary or one of joint beneficiaries).”;

(d) the reference in subsection (4) to the time when the society makes the advance were a reference to the time at which it must be satisfied in respect of the requirements of article 3(5) to (8) above;

(e) the reference in subsection (5) to the basic security were a reference to the appropriate security within the meaning of article 3 above;

(f) subsection (9) were omitted;

(g) subsections (10), (11), (12) and (15) applied to land to which a society becomes entitled jointly with other lenders in a lending syndicate, or as trustee for itself and other such lenders, but subsection (10)(b) applied only in respect of a proportion of the land equal to the proportion which the sum contributed by the society bears to the total sum lent by all the lenders in the syndicate secured by the land; and

(h) the reference in subsection (14)(c) to the society were a reference to the members of the lending syndicate (or any of them).

(4) Section 12(3) shall have effect as if—

(a) the reference in subsection (10)(a) to the value of the basic security were a reference to the value of the security constituting the appropriate security within the meaning of article 3(9) above; and

(b) for subsection (12) there were substituted—

“(12) Every building society shall establish and maintain a system to ensure (or shall satisfy itself that adequate arrangements exist to ensure) the safe custody of all documents relating to property mortgaged—

(a) to the society (whether as sole or joint mortgagee or as trustee for itself and others) or to a person holding it on trust for the society (as sole beneficiary or one of joint beneficiaries); or

(b) to the member of the lending syndicate with whom the society has entered into an arrangement by virtue of which the society is a sub-participant (whether as joint mortgagee or as trustee for himself and others and whether the legal mortgagee is the member or a trustee)

in connection with any participation by the society in syndicated lending under section 14A.”.

(5) Section 13(4) shall have effect as if—

(a) the reference in the opening words of sub-section (1) to assessing the adequacy of the security for any advance to be fully secured on land which is to be made by the society were a reference to assessing whether the requirements of article 3(5) to (8) above are satisfied in relation to an advance to be made by the society as a member of the lending syndicate or, where the society is a sub-participant, by the participating member of the lending syndicate (as defined in article 3(4) above) and as if the other references in section 13 to an advance were references to such an advance;

(b) the reference in subsection (1)(a) to the occasion of each advance were a reference to the time at which the society must be satisfied in respect of the requirements of article 3(5) to (8) above and the words “whether or not any previous assessment was made with a view to further advances or readvances” were omitted;

(c) the reference in subsection (2)(a) to an officer or employee of the society who makes assessments of the adequacy of securities for advances secured on land or who authorises the making of such advances included an officer or employee who assesses whether the requirements of article 3(5) to (8) above are satisfied;

(d) the reference in subsection (2)(b) to the society were to the society or any member of a lending syndicate in which the society is participating under section 14A directly or as a sub-participant;

(e) the reference in the opening words of subsection (3) to making an assessment of the security were a reference to assessing whether the requirements of article 3(5) to (8) above are satisfied and, in relation to a society’s participation in syndicated lending as a sub-participant, as if the words “or authorising the making of the advance” were a reference to authorising the making of the society’s contribution to the advance;

(f) the reference in subsection (3)(a) to the building society making the advance were a reference to the building society or any member of a lending syndicate in which the society is participating under section 14A directly or as a sub-participant making the advance; and

(g) the reference in subsection (4)(b) to making an assessment of the adequacy of the security for an advance were a reference to assessing whether the requirements of article 3(5) to (8) above are satisfied.

(6) Schedule 4 shall have effect as if—

(a) paragraph 1 applied also to land mortgaged to a building society as joint mortgagee or as trustee for itself and others, whether or not the other mortgagees or beneficiaries are building societies; and

(b) paragraph 2 applied (in England and Wales and, subject as there stated, Northern Ireland) only to mortgages of which the legal mortgagee is or are a building society (whether or not acting as trustee) or building societies.

(7) Section 14 shall have effect as if the orders made under it did not contain the provision referred to in subsection (1)(b), (c) and (d).

(8) Sections 15 to 23 are not modified in respect of a society’s participation under section 14A in syndicated lending.

(1)

Section 10 was amended by section 16(2) of and paragraph 7(2) of Schedule 11 to the Deregulation and Contracting Out Act 1994.

(2)

Section 11 was amended by section 16(3), (4) and (5) of and paragraph 7(3) of Schedule 11 to the Deregulation and Contracting Out Act 1994.

(3)

Section 12 was amended by section 16(6) and (7) of the Deregulation and Contracting Out Act 1994.

(4)

Section 13 was amended by paragraph 7(4) and (5) of Schedule 11 to the Deregulation and Contracting Out Act 1994.