Definition
A permanent building society is a type of mutual financial association organized to receive deposits from members and the public on a continuing basis and to make loans secured by real property, particularly for the purchase or construction of homes. Unlike a terminating building society — which dissolves once all its members have received loans and paid them off — a permanent building society operates indefinitely, continuously admitting new members, accepting new deposits, and issuing new loans as a rolling institutional enterprise.
The permanent form emerged in nineteenth-century England and Scotland as an evolution of the earlier terminating model, allowing for a more stable, bank-like structure capable of serving a broader and ever-changing membership. By operating without a fixed dissolution date, permanent building societies could accumulate capital reserves, offer interest-bearing accounts to non-borrowing investors, and function as durable financial intermediaries in the mortgage market.
In the United States, analogous institutions developed under the names building and loan associations and savings and loan associations, carrying forward the core mutual-lending purpose in a form shaped by state law rather than the British statutory framework.
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Common Confusion
PERMANENT BUILDING SOCIETY vs. TERMINATING BUILDING SOCIETY: The distinction is structural and temporal. A terminating society is organized around a defined pool of members, operates until each member has received a loan advance, and then winds up. A permanent society has no fixed end date, recruits members continuously, and functions as an ongoing institution. Rapalje & Lawrence's cross-reference to BUILDING SOCIETY § 4 signals that the permanent form is a subtype requiring understanding of the parent category. Researchers who conflate the two may misread historical documents about a society's financial obligations, its legal capacity to contract, or the rights of members who joined at different stages.
PERMANENT BUILDING SOCIETY vs. SAVINGS BANK: Both accept deposits and make mortgage loans, but a savings bank is not organized on mutual principles of shared ownership among borrowers and depositors. Building society membership carried distinct voting rights, profit-sharing arrangements, and regulatory treatment that differ from depositor status in a savings bank.
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Recognized Forms
/SUBTYPES
Permanent building societies developed two principal classes of membership recognized in British law and practice:
Investing members (sometimes called depositing or shareholding members): Individuals who contributed funds to the society in exchange for interest or dividends but who did not necessarily seek a loan. Their participation supplied the capital base.
Borrowing members: Individuals who received mortgage advances from the society and repaid principal and interest over time, thereby acquiring full ownership of the secured property.
Some societies also issued paid-up shares, deferred shares, and guaranteed stock, creating a layered capital structure that attracted regulatory scrutiny and eventually statutory formalization under successive Building Societies Acts in England.
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Why It Matters in Research
The primary research trap is terminological drift across jurisdictions and across time. In English legal sources from roughly 1850 onward, "building society" almost always means the permanent form; the terminating type had largely receded from commercial significance by the late Victorian period. In American sources, the functional equivalent is the building and loan association or savings and loan association, and these are regulated under entirely separate state statutory schemes with different vocabulary. A researcher reading an American treatise on building and loan associations should not assume that English cases on permanent building societies will map cleanly onto American doctrine, or vice versa.
The Rapalje & Lawrence entry is notably sparse — little more than a cross-reference to BUILDING SOCIETY § 4 — which itself reflects the state of American legal literature in 1883: the permanent form was well understood in English practice and was being transplanted into American law, but had not yet generated a settled American doctrinal vocabulary. Researchers working in late nineteenth-century American sources should expect the institutional concept to be present but the terminology to be unsettled, with courts and treatise writers sometimes using "building society," "loan association," "mutual savings association," and related phrases interchangeably.
For corporate law research, the permanent building society sits at an intersection of mutual organization law, mortgage law, and financial regulation. Questions about member liability, the society's power to contract, the validity of mortgage security, and the rights of withdrawing members all arise in historical litigation and require tracing both statutory authority and judicial construction.
In the Law Mind corpus, primary connections run to building and loan association materials, mutual savings institutions, and mortgage law sources. The encyclopedia treatment of building societies will provide the fuller statutory and historical context that the dictionary entry deliberately compresses.
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Historical Dictionary Support
Rapalje & Lawrence handle PERMANENT BUILDING SOCIETY by cross-reference only, directing readers to BUILDING SOCIETY § 4. This is editorially honest — the substantive law of permanent building societies was treated in that parent entry rather than repeated — but it leaves the stand-alone entry nearly empty of doctrine. The two additional references Rapalje & Lawrence append (PERMANENT POLICY and PERMANENT SICKNESS) are entirely unrelated terms that happen to share the word "permanent" and appear to have been gathered under the same heading by alphabetical proximity rather than conceptual connection, which was a known organizational limitation of mid-to-late Victorian legal dictionaries.
What the entry does not supply — and what later legal dictionaries and encyclopedias fill in — is any account of the statutory architecture. In England, the Building Societies Act 1874 and its predecessors gave permanent societies their formal legal framework, including incorporation, registration, and rules governing member rights. American equivalents were developed state by state without a unified federal model until the twentieth century. Neither the English statutory history nor the American legislative patchwork is accessible from Rapalje & Lawrence's cross-reference alone.
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Jurisdictional Note
The permanent building society as a formal legal entity is primarily a creature of English and Scottish law, operating under successive Building Societies Acts. In the United States, the functional equivalent — the building and loan or savings and loan association — is organized under state law, and the regulatory and corporate law frameworks differ substantially by state. Researchers should treat English authorities on building societies as persuasive but not directly controlling in American jurisdictions, and should identify the specific state statute governing any American institution before relying on general common-law principles derived from English cases.
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