Section 405 - Investment in undivided interests in a real estate loan or a single security(a) Authority to create; retention of interest by institution--An institution may, subject to the limitations of this section, create undivided interests in: (i) a single loan secured by a first lien (other than a lien of taxes, assessments or charges which are not yet due or which are payable without penalty) on improved real estate, or(ii) in a single security, for the purpose of sale from time to time to accounts held by the institution in any capacity provided for under section 402 of this act. The institution may retain a portion of such undivided interests for its own account if the loan or security is one which it would be authorized to acquire pursuant to this act wholly for its own account.
(b) Limitations--The limitations on such undivided interest shall be: (i) The real estate loan or security shall be one which:(A) The institution would be authorized to acquire pursuant to this act wholly for its own account and, in the absence of broader investment powers under the terms upon which it was designated as fiduciary, would also be authorized to acquire as a legal investment for funds held by fiduciaries, or(B) The institution would be authorized to acquire as an investment by the terms upon which it was designated as fiduciary of each account which acquires an undivided interest therein;(ii) All investments in undivided interests for fiduciary accounts shall be made within two years after the date of acquisition of the loan or security by the institution except: (A) Interests sold by a fiduciary account to another fiduciary account, and(B) Interests sold to the institution by a fiduciary account in order to make distribution or for any other purpose approved by the department and resold by the institution to another fiduciary account;(iii) Interests not retained by the institution may be sold only to a fiduciary account;(iv) Interests may be sold by a fiduciary account only to:(A) Another fiduciary account, or(B) The institution in order to make distribution or for any other purpose approved by the department and may be otherwise transferred only in distribution to a beneficiary of the fiduciary account.
(c) Control by institution--The institution shall exercise all rights of ownership in respect of a real estate loan or security in which undivided interests have been sold pursuant to this section and in respect of any property acquired by foreclosure or otherwise in connection with such real estate loan or security, in its own name but for the benefit of itself and all other owners of the undivided interests therein.(d) Records--The institution shall at all times maintain records of all undivided interests created pursuant to this section showing the extent of the undivided interest of each owner therein.(e) Certificate evidencing interests--The institution may issue a certificate evidencing each undivided interest created pursuant to this section, keep records showing the holders of such certificates, provide for transfer of a certificate by the registered holder thereof upon surrender of the certificate and deal with the registered holder of a certificate as the owner of the undivided interest represented by the certificate. Each certificate shall contain a summary of the rights of an owner of the undivided interest represented thereby and expressly disclaim any guarantee by the institution of payment of any amount.1965, Nov. 30, P.L. 847, No. 356, § 405. Amended 1984, July 6, P.L. 621, No. 128, § 6, imd. effective.