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Section 10A — Determination of when an owner's liability for certain costs arises

Tenements (Scotland) Bill: Stage 3 – in the Scottish Parliament at 3:30 pm on 16th September 2004.

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Photo of Murray Tosh Murray Tosh Conservative 3:30 pm, 16th September 2004

Group 8 is on the determination of when liability for certain costs arises. Amendment 10, in the name of the minister, is grouped with amendments 11 to 20 and 23.

Photo of Mary Mulligan Mary Mulligan Labour

This group of amendments was prompted by concerns that members of the Justice 2 Committee raised when it considered the bill at stage 2. Section 11 deals with the apportionment of liability for repairs and other costs when a flat is sold and makes it clear that an owner does not cease to be liable when he or she ceases to own a flat. However, section 11 was framed on the basis that incoming owners would become severally liable with the seller for outstanding liabilities in relation to the relevant flat, although the buyer would have a right of relief against the seller. Concerns were expressed at stages 1 and 2 that an incoming owner might be exposed to large and unexpected bills for repair work if a seller did not disclose the existence of such a liability and then disappeared without trace. The buyer would then, in effect, be solely liable for work that was done before he or she became owner of the flat.

The amendments in this group will allow any owner in a tenement to register a notice in the property registers to make it public that works have been or may be carried out to the tenement. If there is no notice, the incoming purchaser will not be liable for the costs of any work carried out before he or she became an owner. If there is a notice, he or she will be alerted to the fact that there might be an outstanding liability for the work. The purchasing solicitor will, no doubt, ask the seller what that is about. If necessary, a sum can be retained from the purchase price to cover the liability, so the purchaser will be protected, which is what the committee asked us to ensure during stage 2. The notice will also protect the other owners in the tenement because, when a notice is registered, liability will pass to the incoming owner as originally proposed in section 11. The proposals apply only to maintenance work that has already been carried out by the owners.

I apologise, Deputy Presiding Officer. I believe that I have skipped a grouping and am speaking to group 9 rather than group 8.

Photo of Murray Tosh Murray Tosh Conservative

Please continue speaking to the amendments that you are currently dealing with.

Photo of Mary Mulligan Mary Mulligan Labour

The notice procedure is set out in amendments 22 and 24. To be effective against a new order, the notice will have to be registered at least 14 days before the incoming owner becomes the new owner in order to allow time for the property registers to be searched by solicitors for purchasers. The notice will be in a form specified in amendment 72. Amendment 21 is consequential and amendments 38, 42 and 45 are technical.

At stage 2, Nicola Sturgeon envisaged that there should be a financial limit on liability and the notice procedure should not apply until that limit had been exceeded. Although the Executive was originally attracted to the idea of there being a financial limit, we now feel that that would be undesirable. If a limit of, say, £1,000 were imposed, we suspect that purchasing solicitors would simply retain that sum in every case, which would have the effect of distorting the conveyancing system. The other reason for not having a limit is that the incoming owner might be faced with a number of competing demands for a number of repairs from various owners. If the limit applied to all the various repairs, it would not limit the new owner's liability. I suggest that all of that would be unnecessarily complicated, which is why we have not agreed to the suggestion at this stage. I hope that that will be acceptable to the committee members.

I also hope that the committee members will feel that the Executive's proposed amendments to section 11 will provide the kind of protection to incoming owners that they sought and offer an acceptable solution that balances the competing interests of new owners and other owners in a tenement if there is an outstanding liability.

Shall I move amendment 21?

Photo of Murray Tosh Murray Tosh Conservative

No, you should not move amendment 21 at this stage. I thought that it would make sense for you to complete your speech for the sake of the coherence of the debate and the Official Report .

I would like you now to address the amendments in group 8. Members who want to speak about the amendments in group 9 will be able to do so when we have disposed of the amendments in group 8. I should not think that it will be necessary for you to repeat any of the points that you have just made.

Photo of Mary Mulligan Mary Mulligan Labour

Group 8 is a highly technical grouping of amendments. Amendments 10, 11, 13, 15, 17 and 18 amend parts of section 10A so that references to "scheme costs" are changed to "relevant costs". Members will be aware that rule 4 of the tenement management scheme refers only to "scheme costs" but, in cases in which the management scheme in operation for a tenement is wholly or partly made up of burdens contained in the title deeds of the tenement, it is possible that the burdens might go further than the scheme. At present, burdens that do so would not come within the scope of section 10A and, as a consequence, the rules in that section on determination of liability would not apply. The amendments will alter section 10A so that it will now cover cases in which the burdens in the title deeds are more extensive than the provisions of the tenement management scheme.

Amendment 23 is consequential and amendment 12 relates to the time at which an owner's liability for certain costs arises. Section 10A(4) is on costs recoverable as a result of statutory notice. Subsection 6 relates to work instructed by a manager and subsection 1 relates to work or other costs that arise from the scheme decision.

I move amendment 10.

Photo of Murray Tosh Murray Tosh Conservative

No member has asked to speak on group 8.

Amendment 10 agreed to.

Amendments 11 to 20 moved—[Mrs Mary Mulligan]—and agreed to.