§29 — Title 12 Banks and Banking | U.S. Code

Summary

A national bank may buy, keep, and sell real estate only for a few specific reasons: land it needs to run its business, property given as a mortgage to secure loans it already made, property transferred to the bank to pay a debt from its business, or property it buys at foreclosure or to secure a debt. The bank cannot keep title or possession of property held under a mortgage or bought to secure a debt for more than five years, except as explained below. The Comptroller of the Currency can allow the bank to keep such property for up to five more years if the bank tried in good faith to sell it during the first five years or if selling sooner would hurt the bank. If the bank tells the Comptroller that it needs to spend money to improve the property, the Comptroller can let it spend what is needed, with limits, to try to recover its total investment. Also, if a national bank on October 15, 1982 owned real estate (including subsurface rights) that since December 31, 1979 had only a very small book value, the bank may keep that property as long as a state-chartered bank could under state law, as long as earnings from that property are shown separately in the bank’s annual financial statements.

Title 12, §29

Banks and Banking — Source: USLM XML via OLRC

A national banking association may purchase, hold, and convey real estate for the following purposes, and for no others: First. Such as shall be necessary for its accommodation in the transaction of its business. Second. Such as shall be mortgaged to it in good faith by way of security for debts previously contracted. Third. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings. Fourth. Such as it shall purchase at sales under judgments, decrees, or mortgages held by the association, or shall purchase to secure debts due to it. But no such association shall hold the possession of any real estate under mortgage, or the title and possession of any real estate purchased to secure any debts due to it, for a longer period than five years except as otherwise provided in this section. For real estate in the possession of a national banking association upon application by the association, the Comptroller of the Currency may approve the possession of any such real estate by such association for a period longer than five years, but not to exceed an additional five years, if (1) the association has made a good faith attempt to dispose of the real estate within the five-year period, or (2) disposal within the five-year period would be detrimental to the association. Upon notification by the association to the Comptroller of the Currency that such conditions exist that require the expenditure of funds for the development and improvement of such real estate, and subject to such conditions and limitations as the Comptroller of the Currency shall prescribe, the association may expend such funds as are needed to enable such association to recover its total investment. Notwithstanding the five-year holding limitation of this section or any other provision of title 62 of the Revised Statutes, any national banking association which on October 15, 1982, held, directly or indirectly, real estate, including any subsurface rights or interests therein, that since December 31, 1979, had not been valued on the books of such association for more than a nominal amount, may continue to hold such real estate, rights, or interests for such longer period of time as would be permitted a State chartered bank by the law of the State in which the association is located if the aggregate amount of earnings from such real estate, rights, or interests is separately disclosed in the annual financial statements of the association.

Notes & Related Subsidiaries

Editorial Notes

References in Text

Title 62 of the Revised Statutes, referred to in last par., was in the original “this title” meaning title LXII of the Revised Statutes, consisting of R.S. §§ 5133 to 5244, which are classified to this section and section 16, 21, 22 to 24a, 25a, 25b, 26, 27, 35 to 37, 39, 43, 52, 53, 55 to 57, 59 to 62, 66, 71, 72 to 76, 81, 83 to 86, 90, 91, 93, 93a, 94, 141 to 144, 161, 164, 181, 182, 192 to 194, 196, 215c, 481 to 485, 501, 541, 548, and 582 of this title. See, also, section 8, 333, 334, 475, 656, 709, 1004, and 1005 of Title 18, Crimes and Criminal Procedure. For complete classification of R.S. §§ 5133 to 5244 to the Code, see Tables. Codification R.S. § 5137 derived from act June 3, 1864, ch. 106, § 28, 13 Stat. 107, which was the National Bank Act. See section 38 of this title.

Amendments

1982—Pub. L. 97–320 substituted “Notwithstanding the five-year holding limitation of this section or any other provision of title 62 of the Revised Statutes, any national banking association which on

October 15, 1982, held, directly or indirectly, real estate, including any subsurface rights or interests therein, that since

December 31, 1979, had not been valued on the books of such association for more than a nominal amount, may continue to hold such real estate, rights, or interests for such longer period of time as would be permitted a State chartered bank by the law of the State in which the association is located if the aggregate amount of earnings from such real estate, rights, or interests is separately disclosed in the annual financial statements of the association” for “Notwithstanding any other provision of this section, any national banking association which, on

July 27, 1981, held title to and possession of real estate which was carried on the association’s books at a nominal value on

December 31, 1979, may continue to hold such real estate until

December 31, 1982, if the earnings from such real estate are separately disclosed in the financial statements of the association”. 1981—Pub. L. 97–25 inserted provision that any national banking association which, on