Housing (Scotland) Act 1987

F1 73C The deferred financial commitment. S

(1) The deferred financial commitment in respect of a house is the sum arrived at by—

(a) finding the difference between—

(i) the price which was fixed for the purchase of the house under section 62(1); and

(ii) the initial capital payment;

(b) expressing that difference as a percentage of the market value which was determined under section 62(2) for the purpose of fixing the price of the house;

(c) reducing that percentage figure by—

(i) 7 or such other number as may, with the consent of the Treasury, be prescribed; and

(ii) in a case where payment has been made under subsection (4), the percentage figure which the amount so paid represents in relation to the market value mentioned in paragraph (b);

(d) finding the sum which is equal to that resultant percentage of the resale value of the house; and

(e) in a case to which subsection (5) of section 73D applies, adding to that sum the amount which falls to be added under subsection (6) of that section.

(2) No interest shall accrue on the deferred financial commitment.

(3) Payment of the deferred financial commitment—

(a) shall, subject to section 73D, be made to the original seller of the house—

(i) on the sale or other disposal of the house by the rent to loan purchaser; or

(ii) if the rent to loan purchaser does not sell or dispose of it, on his death; and

(b) may be so made in whole at any earlier time.

(4) Subject to section 73D(3), payment may be made at any time for the purpose of reducing the deferred financial commitment in accordance with subsection (1)(c)(ii).

(5) Subject to subsection (6), payment of the deferred financial commitment shall be made as soon as may be after the destruction of or damage to the house by fire, tempest, flood or any other cause against the risk of which it is normal practice to insure.

(6) Subsection (5) does not apply where, following the destruction of or damage to a house, it is rebuilt or reinstated.

(7) A standard security granted in security of the deferred financial commitment shall, notwithstanding section 13 of the Conveyancing and Feudal Reform (Scotland) Act 1970, have priority before any standard security securing the liability to make a repayment under section 72(1) but immediately after—

(a) any standard security granted in security of any amount advanced by a recognised lending institution—

(i) to enable payment of the initial capital payment or payment under subsection (4);

(ii) for the improvement of the house; or

(iii) for any combination of those purposes,

(together with any interest, expenses and outlays payable thereunder); and

(b) with the consent of the original seller, a standard security over the house granted in security of any other loan (together with any such interest, expenses and outlays).

In this subsection—

• a “recognised lending institution” is one which is recognised for the purposes of section 222;

• references to interest payable under a standard security are references both to present and future interest payable thereunder including interest which has accrued or may accrue; and

• references to expenses and outlays include interest thereon.

(8) In this section—

(a) the “resale value” of a house is, subject to subsections (9) and (10)—

(i) where it is being sold by the rent to loan purchaser on the open market with vacant possession and a good and marketable title, the price at which it is being so sold;

(ii) where the rent to loan purchaser has died not having sold or disposed of it, its value for the purpose of confirmation to his estate;

(iii) in any other case, such amount as is agreed for the purposes of this sub-paragraph between the rent to loan purchaser and the original seller or, failing such agreement, such amount as is determined for those purposes by an independent valuer as the value of the house, assuming it to be available for sale in the circumstances specified in sub-paragraph (i) on a date as near as may be to the date when payment of the deferred financial commitment is to be made; and

(b) the “original seller” of a house is the body which, as the landlord of the house, sold it in pursuance of this Part to the rent to loan purchaser or, where another body has succeeded to the rights and duties of that body in relation to the house, that other body.

(9) In arriving at the resale value of a house no account shall be taken of—

(a) anything done by the rent to loan purchaser (or any predecessor of his as secure tenant of the house) which has added to the value of the house; or

(b) any failure by him (but not by any such predecessor) to keep the house in good repair (including decorative repair).

(10) For the purposes of agreeing or determining the amount of the resale value of a house under subsection (8)(a)(iii) in a case where it has been destroyed or damaged by a cause referred to in subsection (5), that value shall be taken as including the value of any sums paid or falling to be paid to the rent to loan purchaser under a policy insuring against the risk of the cause of destruction of or damage to the house except to the extent that they have been or fall to be applied in meeting the cost of any rebuilding or reinstatement which has been carried out.

Textual Amendments

F1 Ss. 73A-73D inserted (27.9.1993) by 1993 c. 28, s. 142; S.I. 1993/2163, art. 2, Sch. 1.