442Agreement by local authority to indemnify mortgagee.E+W
(1)A local authority may, with the approval of the Secretary of State, enter into an agreement with—
(a)a building society lending on the security of a house, or
(b)a recognised body making a relevant advance on the security of a house,
whereby, in the event of default by the mortgagor, and in the circumstances and subject to conditions specified in the agreement, the authority binds itself to indemnify the society or body in respect of the whole or part of the mortgagor’s outstanding indebtedness and any loss or expense falling on the society or body in consequence of the mortgagor’s default.
(2)The agreement may also, if the mortgagor is made party to it, enable or require the authority in specified circumstances to take a transfer of the mortgage and assume rights and liabilities under it, the building society or recongised body being then discharged in respect of them.
(3)The transfer may be made to take effect—
(a)on terms provided for by the agreement (including terms involving the substitution of a new mortgage agreement or modification of the existing one), and
(b)so that the authority is treated as acquiring (for and in relation to the purposes of the mortgage) the benefit and burden of all preceding acts, omissions and events.
(4)The Secretary of State may approve particular agreements or give notice that particular forms of agreement have his approval, and in either case may make his approval subject to conditions.
(5)The Secretary of State shall before giving notice that a particular form of agreement has his approval consult—
(a)in the case of a form of agreement with a building society, the [F1Building Societies Commission] and such organisations representative of building societies and local authorities as the Secretary of State thinks expedient;
(b)in the case of a form of agreement with a recognised body, such organisations representative of recognised bodies and local authorities as he thinks expedient.
Textual Amendments
F1Words substituted by Building Societies Act 1986 (c. 53, SIF 16), ss. 54(3)(a)(5), 120(1), Sch. 18 Pt. I para. 18(2)
Modifications etc. (not altering text)
C1S. 442 amended by Local Government Act 1985 (c. 51, SIF 81:1), s. 57(7), Sch. 13 paras. 22 and 23 as substituted by Housing (Consequential Provisions) Act 1985 (c. 71, SIF 61), s. 4, Sch. 2 para. 61
S. 442 extended (5.7.1994) by 1994 c. 19, s. 39, Sch. 13 para. 21(d) (with ss. 54(5)(7), 55(5), Sch. 17 paras. 22(1), 23(2))
C2S. 422(1)(a) amended by S.I. 1986/148, art. 10(1)