COMMONS AMENDMENT (Hansard, 14 October 1981)

§ The Earl of Mansfield
My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 73. This is altogether, I was about to say, a more important amendment, but that is probably the wrong word: it is a more substantial amendment than most that we have been discussing. This new clause protects the interests of building societies and other heritable creditors so that mortgage or loan repayments are maintained by the non-entitled spouse, where he or she is in sole occupation of the matrimonial home and the entitled spouse is not making the necessary payments. This of course could arise following an exclusion order. It is open to the non-entitled spouse to seek an order apportioning expenditure so that the excluded spouse pays his fair share. It would be wrong for that spouse to enjoy occupancy without paying for it; this was a possibility in certain circumstances under the Bill before the amendment was made.
I should perhaps say particularly to my noble friend Lord Selkirk that this amendment was tabled following representations made by the Building Societies' Association. As my noble friend well knows, a number of meetings took place earlier in the year and my honourable friend Mr. Rifkind eventually decided that an amendment was needed. The various officials including those in the Scottish Office and the Building Societies Association have been in regular contact during the passage of the Bill through another place. I understand that the Building Societies Association have indicated that generally speaking they 393 are content with the anticipated operation of the new clause. I beg to move.

The Earl of Selkirk
My Lords, I should like very much to thank my noble friend for this clause. It is a very important clause indeed. I am afraid the truth is that when this Bill was first introduced the position of third parties was completely omitted. If noble Lords care to look at the explanatory clauses in the Bill as it was originally presented to the House they will see that there was no mention whatever of the position of third parties. That is of the utmost importance. Anyone buying a house must be sure of getting a clear title. As the Bill stood originally that was not the case.
I should like to ask one or two questions because although I believe that the intention of this new clause is quite clear, it does raise one or two complications as to what in the events of the world and the things that can happen to married couples might or might not happen. It is of vital importance that people should get a clear title. If anyone owns a house or occupies one and finds that there is some defect in the title, that would be of major concern to any family. There is no bigger contract which the average family ever enters into than that of buying a house. The intention of the Government is, I am sure, right. I am glad to say that I think that it works, but none the less I should like to ask one or two questions.
The first point is that in the event of someone holding a house under mortgage failing in his obligations then action can be taken to make him pay. That is fair enough. We then come to the second part of the clause which deals with the purchase of the house which may be subject to a matrimonial obligation. If we look at subsection (2)(a) and (b) we sec that there is reference to an affidavit declaring that when the mortgage was granted there was no non-entitled spouse and in paragraph (b) there is reference to the renunciation of any title. A lot of things can happen about that and I just want to mention them because some of them are pretty odd. First, the spouse may disappear. Secondly, the affivadit which is made may be false. Thirdly, if the affidavit is, for example, 10 or 20 years old will that be acceptable? What do you do with the affidavit? Do you register it with the Registrar of Savings? All these things are there and there may be others that one can think of, because very odd things do happen sometimes with families.
I believe that the Government's intention is clear. They want to be quite certain that the title of a third party buying a house would not be subject to any defect. But will they be prepared to say that, if the courts interpret this—and this is what matters—in a manner which is not the intention of the Government, they will give close consideration or even an undertaking that they will consider any request for amending legislation? That is absolutely fundamental to the security of tenure of house ownership; I believe that the Government and the House agree with owner occupation. If there were to be any doubts about this, it would constitute a very serious impediment to the spread and increase of owner occupation.
394 The Government have done what they can to put right a situation which was wholly absent when the Bill began. I am very grateful to them for doing so and for listing the representations, which are absolutely right. However, I should like to be clear that this must be correct in the view of the courts, and, bearing in mind the extreme variations of a wife disappearing or a wife appearing who possibly was not known about and a number of other circumstances, it is possible that the wordings are not sufficient. I should like to ask the noble Lord whether he can answer those questions because I believe it is important to be clear about what should and can be done.

§ The Earl of Mansfield
My Lords, I shall certainly try to answer my noble friend's questions. The situation with which we are dealing here comes about where there is a purchase and at the same time security is taken. In those circumstances, so I believe, it would not be necessary to register, for instance, the affidavit. It is enough for the creditor—that is, in most cases the building society seeking to rely on that affidavit—to retain it.
As my noble friend knows quite well, many consultations took place as between the Building Societies' Association and, indeed, other bodies and the Government while the Bill wended its way through both Houses, in order to try to see that this provision should be as watertight and as clear, particularly to the courts, as possible. Certainly there is every confidence on the part of the Government and the draftsmen that they have got it right. But, of course, it happens—and I acknowledge it—that however much care is taken and however much consultation there will be, the courts will seek to place an interpretation on legislation which no one could possibly have foreseen at the time it came to be drafted or before that when instructions were given to the draftsmen.
If that happens and if, as a result, a situation is produced which is unsatisfactory, I have absolutely no doubt—because the position would be as important as my noble friend says, particularly in relation to house owners—that the Government of the day would give very anxious consideration to amending legislation to correct the position. But, of course, my noble friend knows as well as I do that I cannot go further than to say what I believe any future Government would do.

§ Lord Ross of Marnock
My Lords, one of the dangers that are bound to arise over the complications that are envisaged—and rightly envisaged—by building societies is that building societies may well, in the case of first-time purchasers, require a renunciation. If that takes place as a matter of routine, it would virtually destroy the protections that we are offering within the Bill. I do not know whether or not it could be avoided.
The noble Earl, Lord Selkirk, will of course remember that in the original inquiry, which led to the Bill itself, there was a very complicated machinery in respect of registration of the right of the non-titled spouse. The Government, I think, quite rightly, shied away from the complications. It would have been far too much for most people. However, there is now this danger that in respect of home ownership we may find that it will become a matter of routine 395 for building societies to ask for that affidavit showing that the wife, or the non-entitled spouse, has renounced her rights to occupancy in order to prevent the difficulties that might well arise either over the sale of the property or if there is a breakdown of the marriage, when someone has to shoulder the burden who did not normally expect to. We must face this. The Government, in their discussions with the building societies, probably arrived at what was the best possible form of words to give protections and at the same time not to deprive a spouse of the possibility of protections offered in Clause 1 of the Bill.

The Earl of Selkirk
My Lords, the noble Lord, Lord Ross of Marnock, is perfectly correct. When you buy a house today you must have one of two things: either a renunciation from the wife as well as from the husband, otherwise you cannot sell the house; alternatively, you must have an affidavit saying that when the security was made there was no spouse at all. This must become an absolutely routine matter in conveyancing everywhere. I am very grateful to my noble friend for what he has said. I cannot go into all the conceivable details. His intention is perfectly clear and his recognition that what is required is essential for the wellbeing of the householder. He said that, and I am extremely grateful to him.

§ Lord Drumalbyn
My Lords, I should like to ask one question on this. I am sure that there is a risk, as the noble Lord, Lord Ross, pointed out, but am I right in thinking that in all these cases it is only the occupancy of the house that is transferred, where it is transferred, and that residual interest—presumably a half interest in normal cases—would remain with the entitled person? That being so, is it not likely that the entitled person would make sure that the house was not sold; in other words, that the entitled person would make sure that the non-entitled person who has occupancy would be in a position to maintain the payments.

§ The Earl of Mansfield
My Lords, I think that I can answer that question and also the noble Lord, Lord Ross, in this way. It would be wrong for a wife—because it very nearly always will be a wife—to enjoy the occupancy of what had been the matrimonial home without paying for it. This possibility was very much in the minds of everyone when this amendment came to be drafted. The whole thrust of house ownership at the moment is towards joint ownership. I suspect that the number of houses which are, in fact, now bought on mortgage in the name of only one spouse is comparatively small as compared with the whole. So it is believed that this is the solution which the building societies would prefer and this is the case with mortgages as they are now and and will be in the future. Therefore, to that extent I think that the fears of the noble Lord, Lord Ross, are—I shall not say groundless because that would put it much too far—perhaps less grave than he thinks.