The Building Societies (Isle of Man) Order 1987

Articles 2 and 3

SCHEDULE 1

1.  The form of security which may be taken for an advance under section 14 of the Act in relation to the specified territory is the form (known there as a bond and security)—

(a) acknowledging a mortgage debt and obliging the borrower to pay it, and

(b) securing payment of that mortgage debt on land in the Isle of Man,

in respect of which the following provisions of this Schedule are satisfied.

2.  Circumstances in which the relevant form of security may be taken for an advance—

(a) do not, subject to Article 6 above, include circumstances in which payment of the mortgage debt is to be secured on an equitable interest in land, and

(b) do not include circumstances in which provision is included as respects either the capital or the interest element in the mortgage debt that the amount due to the society may be adjusted by reference to any index of prices (whether housing prices or other prices) or to a share in the open market value of the land.

3.—(1) A territory advance shall be classified as a class 1 advance for the purposes of the requirements of Part III of the Act for the structure of commercial assets where the society at the time when it makes the advance is satisfied that—

(a) the borrower is an individual,

(b) the land comprising the security is exclusively for the residential use of—

(i) the borrower, or

(ii) the borrower and any person residing with the borrower;

(c) the amount advanced will not exceed the value of the land comprising the security (after deducting from that value any mortgage debt of the borrower to the society outstanding under a relevant form of security relating to that land); and

(d) the land comprising the security will not be security for any advance other than an advance by the society (except where that other advance is postponed to the society’s advance).

(2) For the purposes of subparagraph (1) above and paragraph 4 below, where a society makes an advance by instalments, the reference to the time when the society makes the advance is a reference to the time when it pays the first of the instalments.

4.  A territory advance shall be classified as a class 2 advance for the purposes of the requirements of Part III of the Act for the structure of commercial assets where the society at the time when it makes the advance is satisfied that the requirements of paragraph 3(1)(c) and (d) above are satisfied but is not satisfied that the requirements of paragraph 3(1)(a) and (b) above are satisfied.

5.  If at any time when an advance treated by virtue of this Order as a class 1 advance or a class 2 advance for the purposes specified in paragraphs 3 and 4 above is outstanding the society is satisfied, on notice given to it by the borrower, that there has been a change in the use of the land comprising the security and is satisfied that, had the use been so changed before the making of the advance, the advance would instead have been a class 2 advance or a class 1 advance, as the case may be, for those purposes, the advance shall be reclassified accordingly as from that time.

6.  The relevant form of security may only be taken for an advance under section 14 of the Act in circumstances in which the advance is classifiable as a class 1 advance under paragraph 3 above or a class 2 advance under paragraph 4 above.

Article 7

SCHEDULE 2 EXCLUSION OR MODIFICATION OF RELEVANT PROVISIONS

1.  Section 10 of the Act (power to make advances secured on land) shall not apply to territory advances.

2.  Subsections (1) to (7), (9) to (13) and (15) of section 11 of the Act (classification of advances made under section 10) shall not apply to territory advances.

3.  Subsections (1) to (11) and (13) of section 12 of the Act (supplementary provisions) shall not apply to territory advances.

4.  Section 13(7) of, and Schedule 4 to, the Act (sale of mortgaged property and discharge of mortgages) shall not apply to territory advances.

5.  Section 18 of the Act (power to invest in associated bodies) shall have the effect in relation to territory advances so as to treat them, for the purposes of subsection (4) thereof, as if they were advances secured on land in the United Kingdom.

6.  Section 69 of the Act (disclosure and record of income of related businesses) shall have effect in relation to territory advances as if, in subsection (17) thereof —

(a) the definition of “conveyancing services” related additionally to land in the specified territory and included the preparation of conveyances, contracts and other documents in connection with, and other services ancillary to, the disposition or acquisition of estates or interests in that land, and

(b) the definition of “solicitor” included, in relation to the specified territory, an advocate.