(a) An association may acquire and hold stock of one or more corporations the primary activities of which are engaging in real property investment, in which event the sum of (1) investments made by an association pursuant to the authority of this subdivision, (2) any loans and guarantees extended by an association to, or for the benefit of, corporations the stock of which it holds pursuant to the authority of this subdivision, and (3) real property investments made pursuant to the authority of subdivision (b), unless a higher percentage is approved by the commissioner in writing, shall not exceed 10 percent of the total assets of the association.

(b) An association may engage in real property investment. The total of all real property investments made pursuant to the authority of this subdivision, unless a higher percentage is approved by the commissioner in writing, shall not exceed the total shareholders’ equity of the association.

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(c) Prior to initially engaging in real property investment activities authorized by subdivision (a) or (b), an association shall make application with the commissioner for approval of its general plan of real property investment. The application for approval shall be in letter form, shall contain a copy of the general plan for real property investment as approved or adopted by the board of directors of the association, which shall include a brief description of either the activities of the corporations the association will invest in or the activities the association will engage in, or both, the approximate amount to be invested, the extent, if any, of diversification of those activities or investment, and the approximate date of the initial investment, and shall be signed by the chief executive officer of the association. Unless the commissioner finds (1) that the capital, assets, management, earnings, and liquidity of the association are, on a composite basis, not satisfactory or (2) that the plan for the association to engage in real property investment or to acquire and hold the stock of one or more real property investment corporations is unsafe or unsound, the commissioner shall approve the application. An application for approval shall be deemed approved on the 46th day after the application is filed with the commissioner, unless the commissioner earlier makes a final decision on the application or extends the period for approving or denying the application. For purposes of this subdivision, an application for approval shall be deemed to be filed with the commissioner on the date when the application, substantially in compliance with the requirements of this subdivision, is received by the commissioner. Upon the filing of the application for approval, the applicant shall pay to the commissioner a filing fee of five hundred dollars ($500).

(d) As used in this section, “real property investment” means all forms of investing in real property, whether direct or in the form of partnerships, joint ventures, or other methods of investment. It includes, but is not limited to, the purchasing, subdividing, and developing of real property or any interest therein, the building of residential housing or commercial improvements, and the owning, renting, leasing, managing, operating for income, or selling of that property.

(e) The legality of any investment lawfully made pursuant to former Section 7350, as repealed by the act enacting this section, shall not be affected by this section, nor shall this section be construed to require the changing of any investments lawfully made prior to January 1, 1991.

(Repealed and added by Stats. 1990, Ch. 1118, Sec. 41.5.)