(1) A society shall not advance money on the security of any freehold or leasehold estate which is subject to a prior hypothecary obligation or mortgage, unless the prior hypothecary obligation or mortgage is in favour of the society making the advance.
(2) If any advance is made in contravention of this section, the directors of the society who authorised the advance shall be jointly and severally liable for any loss on the advance occasioned to the society.