§ 10.30 p.m.1446
§ was absolutely necessary in the interest of justice in Scotland.
§ Question put, That the clause stand part of the Bill:—
The Commitee divided: Ayes 116, Noes 22.
' and any such deed accepted by the keeper shall be valid and effective for the purposes of loans made under the Building Societies Acts notwithstanding any provisions to the contrary in such Acts '.
§ The clause seeks to enable deeds to be recorded in various registers by virtue of mitigating the penalites for non-payment of the correct stamp duty. Its secondary purpose is to enable stamp duty to be paid at a later stage and for any deed to be used as an adminicle of evidence for whatever purpose is required. Apart from the industrial dispute in the courts, 1447 there is an industrial dispute that involves the stamping office. Although some lawyers have taken deeds from Scotland to London where there is no such dispute, for the purposes of most solicitors that is not feasible.
§ The effect of the non-stamping of a deed is that building societies, in terms of the regulations provided in the Building Societies Acts, are unable to instruct the encashment of cheques. The cheques issued to solicitors are capable of being encashed only where there is a valid security, namely, a principal writ plus a standard security that is available for registration.
§ The effect of the clause is to enable deeds to be recorded although they are not stamped, provided that they are stamped later. That is sufficient for a purchaser because it allows him to stamp the deed at a later stage.
§ If the purchaser neglects to stamp the deed, that will be at his own risk. The deed will become valid if the time limits are not followed correctly as set out in the clause. However, the problem that arises, as I read the clause, is that it contains nothing that will override the specific building society provisions, which make it a breach of the rules of a society to release cheques and to have cheques encashed unless there is a security that is valid for all purposes.
§ There is no security from the lender's point of view unless stamp duty is paid at a later stage. Bearing in mind the omission that I see in the clause, there will be difficulty in overcoming the prohibition that exists in building society legislation. I am not convinced that the clause as framed would allow a building society to permit solicitors to encash cheques and thus complete hereditable transactions.
§ That will have many practical effects, and bad effects, on individual citizens. Stamp duty is fixed at a fairly low level, and these days a fairly ordinary bungalow or semi-detached house may be priced from £18,000 to about £28,000. That sort of property comes within the stamp duty bracket. If the loan cannot be provided by the building society, the purchaser has to take finance from a bank on a bridging loan, which can be extremely expensive because of the interest that is charged.1448
§ I foresee a practical problem emerging from clause 6. The amendment is intended to rectify the position and to make it possible for building societies to authorise to their solicitors the encashment of cheques. I am told that one building society is prepared to run the risk of telling its agents that it is prepared for its cheques to be encashed in the emergency situation, but other building societies have specifically requested their agents not to do so. Therefore, there is a real problem. I hope that the Government will accept the amendment, which is designed to deal with the specific circumstances of that case.
§ The Lord Advocate
Building societies are normally unwilling to lend to a borrower unless he has a recorded title to his property. At present, a borrower cannot record his title if his property is valued at £15,000 or more without his title being duly stamped. That gives rise to the problem.
In the Government's view, the amendment is unnecessary. Clause 6 allows a borrower to obtain a recorded title to his property even though the title is not duly stamped. It specifically provides that a deed so recorded should be available for all purposes, provided that it is stamped within a certain period. I am assured that there is nothing in the Building Societies Acts to prevent building societies from lending on the security of such a title, although doubtless they will take steps to ensure that the borrower's title is duly stamped as soon as it is returned by the keeper after it has been recorded. I hope that any doubts will have been resolved and that if there is an administrative problem within a building society it will have been removed.
§ The Lord Advocate
I shall complete the argument, as I wish to point out a defect in the amendment.
The amendment is defective because it provides that any deed accepted by the keeper should be valid for the purposes of loans by building societies. The deeds which may be accepted by the keeper for recording or registering in terms of this clause go much further than that. They are not restricted to deeds relating to loans on property. They could 1449 include deeds such as trust instruments. It would be nonsense to say that such an instrument should be effective only for the purpose of making loans.
§ Mr. Gordon Wilson
I am not sure that I entirely accept what the Lord Advocate said. However, I prefer to leave that aside and concentrate on the situation which may arise in the absence of a specific provision to override the prohibition in the Building Societies Acts. I have been informed that a prohibition exists. I follow the rather involved argument which the Lord Advocate made on that subject. However, I am not convinced by it. I ask the Lord Advocate to do a little more research on the matter and consult the building societies before the Bill goes to another place.
§ I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 6 ordered to stand part of the Bill.
§ Clause 7 ordered to stand part of the Bill.