SCHEDULES

Section 3(2).

SCHEDULE 1 [Part II of Schedule 2 to 1986 Act]

Capacity of society and power of directors to bind it

Capacity of society not limited by its memorandum

16 (1) The validity of an act done by a building society shall not be called into question on the ground of lack of capacity by reason of anything included in the society’s memorandum.

(2) A member of a building society may bring proceedings to restrain the doing of an act which but for sub-paragraph (1) above would be beyond the society’s capacity; but no such proceedings shall lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the society.

(3) It remains the duty of the directors of a building society to observe any limitations on their powers flowing from the society’s memorandum; and action by the directors which but for sub-paragraph (1) above would be beyond the society’s capacity may only be ratified by the society by special resolution.

(4) A resolution ratifying such action shall not affect any liability incurred by the directors or any other person; relief from any such liability must be agreed to separately by special resolution.

Power of directors to bind society

17 (1) In favour of a person dealing with a building society in good faith, the power of the board of directors to bind the society, or authorise others to do so, shall not be limited by reason of anything included in the society’s constitution, that is to say, its memorandum and rules.

(2) For this purpose—

(a) a person deals with a building society if he is a party to any transaction or other act to which the society is a party;

(b) a person shall not be regarded as acting in bad faith by reason only of his knowing that an act is beyond the powers of the directors under the society’s constitution; and

(c) a person shall be presumed to have acted in good faith unless the contrary is proved.

(3) The references above to limitations on the directors' powers under the society’s constitution include limitations deriving from a resolution of the society passed at a general meeting or special meeting or on a postal ballot, or from any agreement between the members of the society.

(4) Notwithstanding anything in paragraph 3(2) above, sub-paragraph (1) above applies in relation to members of the society, and to persons claiming on account of members or under the rules of the society, as it applies in relation to other persons.

(5) Sub-paragraph (1) above does not affect any right of a member of the society to bring proceedings to restrain the doing of an act which is beyond the powers of the directors; but no such proceedings shall lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the society.

(6) Nor does that sub-paragraph affect any liability incurred by the directors, or any other person, by reason of the directors' exceeding their powers.

No duty to enquire as to capacity of society etc.

18 (1) A party to a transaction with a building society is not bound to enquire as to whether it is permitted by the society’s constitution or as to any limitation on the powers of the board of directors to bind the society or authorise others to do so.

(2) Notwithstanding anything in paragraph 3(2) above, sub-paragraph (1) above applies in relation to members of the society as it applies in relation to other persons.

Section 7(2).

SCHEDULE 2 [Schedule 2a to 1986 Act]

Discharge of mortgages: supplementary provisions

Main provisions

1 (1) When all money intended to be secured by a mortgage given to a building society has been fully paid or discharged, the society may endorse on or annex to the mortgage one or other of the following—

(a) a receipt in the prescribed form signed by any person acting under the authority of the board of directors;

(b) a reconveyance of the mortgaged property to the mortgagor;

(c) a reconveyance of the mortgaged property to such person of full age, and on such trusts (if any), as the mortgagor may direct.

(2) Where in pursuance of sub-paragraph (1) above a receipt is endorsed on or annexed to a mortgage, not being a charge or incumbrance registered under the [1925 c. 21.] Land Registration Act 1925, the receipt shall operate in accordance with section 115(1), (3), (6) and (8) of the [1925 c. 20.] Law of Property Act 1925 (discharge of mortgages by receipt) in the like manner as a receipt which fulfils all the requirements of subsection (1) of that section.

(3) Section 115(9) of the Law of Property Act 1925 shall not apply to a receipt in the prescribed form endorsed or annexed by a building society in pursuance of sub-paragraph (1) above; and in the application of that subsection to a receipt so endorsed or annexed which is not in that form, the receipt shall be taken to be executed in the manner required by the statute relating to the society if it is signed as mentioned in sub-paragraph (1)(a) above.

(4) The foregoing sub-paragraphs shall, in the case of a mortgage of registered land, have effect without prejudice to the operation of the Land Registration Act 1925 or any rules in force under it.

(5) In this paragraph—

• “mortgage” includes a further charge;

• “the mortgagor”, in relation to a mortgage, means the person for the time being entitled to the equity of redemption; and

• “registered land” has the same meaning as in the Land Registration Act 1925.

(6) This paragraph does not extend to Scotland.

Application of paragraph 1 to Northern Ireland

2 (1) In its application to Northern Ireland, paragraph 1 above shall have effect with the following modifications.

(2) In sub-paragraph (1) after the words “on such trusts” there shall be inserted the words “or uses”.

(3) In sub-paragraph (2)—

(a) for the words from “charge” to “Property Act 1925” there shall be substituted the words “charge on registered land, the receipt shall operate in accordance with Article 3(1), (7) and (9) of the [S.I. 1983/766 (N.I.9).] Property (Discharge of Mortgage by Receipt) (Northern Ireland) Order 1983”; and

(b) for the words “subsection (1) of that section” there shall be substituted the words “paragraph (1) of that Article”.

(4) For sub-paragraphs (3) and (4) there shall be substituted the following sub-paragraphs—

“(3) If the mortgage is registered in accordance with the [1970 c. 25 (N.I.).] Registration of Deeds Act (Northern Ireland) 1970, the registrar under that Act shall—

(a) on production of the receipt mentioned in sub-paragraph (1) above make a note in the Abstract Book against the entry relating to the mortgage that the mortgage is satisfied; and

(b) grant a certificate, either on the mortgage or separately, that the mortgage is satisfied.

(4) The certificate granted under sub-paragraph (3)(b) above shall—

(a) be received in all courts and proceedings without further proof; and

(b) have the effect of clearing the register of the mortgage.”

(5) In sub-paragraph (5) for the definition of “registered land” there shall be substituted the following definition—

““registered land” means land the title to which is registered under Part III of the [1970 c. 18 (N.I.).] Land Registration Act (Northern Ireland) 1970.”

Power to prescribe form of documents

3 (1) The Chief Registrar may make rules for prescribing anything authorised or required by paragraph 1 above to be prescribed; and in this Schedule “prescribed” means prescribed by rules made under this paragraph.

(2) The power to make rules under this paragraph shall be exercisable by statutory instrument.