N.M. Admin. Code § 12.16.35.8

Current through Register Vol. 35, No. 21, November 5, 2024

Section 12.16.35.8 - LEASING ACTIVITIES

A. A state bank may purchase or construct a municipal building, such as a school building or other similar public facility, and, as holder of legal title, lease the same to a municipality or other public authority having resources sufficient to make payment of all rentals as they become due. The lease agreement shall provide that upon its expiration the lessee will become owner of the building or facility.

B. A state bank may:

(1) become the legal or beneficial owner and lessor of specific personal property or otherwise acquire such property at the request of the lessee who wishes to lease it from the bank; or

(2) become the owner and lessor of personal property by purchasing the property from another lessor in connection with its purchase of the related lease; and

(3) incur obligations incidental to its position as the legal or beneficial owner and lessor of the leased property. If the lease is a net, full-payout lease representing a noncancelable obligation of the lessee, notwithstanding the possible early termination of that lease.

C. Full-payment calculations on leases of personal property to domestic governmental entities may be based on reasonably anticipated future transactions or renewals.

D. If in good faith a state bank believes that there has been an unanticipated change in conditions which threatens its financial position by significantly increasing its exposure to loss, the limitations contained in paragraphs 8.2 and 8.3 of this regulation [ now Subsections B and C of 12.16.35.8 NMAC] shall not prevent the bank:

(1) as owner and lessor under a net, full-payout, lease, from taking reasonable and appropriate action to salvage and protect the value of the property or its interests arising under the lease; or

(2) as the assignee of a lessor's interest in a lease, from becoming the owner and lessor of the leased property pursuant to its contractual right, or from taking any reasonable and appropriate action to salvage or protect the value of the property or its interests arising under the lease.

E. The limitations in paragraphs 8.2 and 8.3 of this regulation [now Subsections B and C of 12.16.35.8 NMAC] do not prohibit a state bank from including any provisions in a lease, or from making any additional agreements, to protect its financial position or investment in the circumstances set forth in paragraphs 8.4A and B of this regulation [now Paragraphs (1) and (2) of Subsection D of 12.16.35.8 NMAC].

N.M. Admin. Code § 12.16.35.8

1/31/74, 11/15/96; Recompiled 10/15/01