ADVOKS GLOBAL · KENYA
Building Societies Act
24. Power to make advances to members
Edition: 2022-12-31 · In force
24. Power to make advances to members
(1)A building society may, subject to this section, make advances to its members out of its funds upon the security of land.(2)No building society shall advance money on the security of land which is subject to a prior mortgage, unless the prior mortgage is in favour of the society making the advance; and if any advance is made in contravention of this subsection, the directors of the society who authorized the advance shall be jointly and severally liable for any loss on the advance occasioned to the society.(3)No building society shall, in Kenya—(a)grant or permit to be outstanding an advance or credit facility to any one of its members in excess on twenty-five per cent of its core capital;(b)grant or permit to be outstanding any advance or credit facility to any of its directors or employees in excess of twenty per cent of its core capital.(4)In determining the amount of any advance made by a building society to one of its members upon the security of land, the society shall not take into account the value of any additional security taken by the society for the advance, other than a security of a class specified in the Second Schedule.(5)Where a charge upon a policy of life assurance is taken as additional security for an advance, the value of the policy shall be assessed at an amount not exceeding the surrender value thereof at the time when the advance is made.(6)Where a guarantee given in pursuance of a continuing arrangement is taken as additional security for an advance, the advance shall not exceed an amount which may be prescribed or ninety per centum of the amount of the purchase price for the defraying of which the advance is made, whichever is the less, without the consent in writing of the Registrar; and in any such case the basic advance shall not exceed sixty-five per centum of that amount and the excess advance shall not exceed twenty-five per centum of that amount.(7)Where a building society takes as additional security for an advance to a member a guarantee given in pursuance of a continuing arrangement, the terms of the advance shall not provide for the payment of any sums to the society in respect of the advance after the expiration of a period of twenty years (or such other period, being either longer or shorter, as the Registrar may authorize in writing) from the date on which the advance is made, nor, after the advance has been made by the society, shall the society make any agreement which has the effect of rendering any sums payable to the society in respect of the advance after the expiration of that period:Provided that nothing in this subsection shall affect the power of a society to make such an agreement in relation to an advance which has been made by the society not less than one year before the making of the agreement if, in the opinion of the directors, it is desirable so to do in order to avoid hardship to a member of the society.(8)Notwithstanding the provisions of subsections (1) to (7), a building society may, for the benefit of its members, extend loans, advances, guarantees and other credit facilities not secured by land and at such terms and conditions as the society considers appropriate.