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Section 15(5).

SCHEDULE 2 Recipients of Depreciation Payments: Special Cases

Mortgages

1 (1) Subject to paragraph 2 below, where the Corporation are satisfied that the interest in the property in question of any person to whom, apart from this paragraph or paragraph 4 below, the whole or part of a depreciation payment would fall to be made was subject to a mortgage at the time when the subsidence damage became evident (“the relevant time”), the payment or that part of the payment shall be paid to the mortgagee.

(2) The mortgagee shall be liable to account for such a payment as if it had been proceeds of sale of the mortgaged interest arising under a power of sale exercised by the mortgagee at the relevant time, except that the mortgagee shall not be entitled to credit for any costs incurred by him in connection with the claiming, ascertainment, apportionment or making of the payment.

(3) In this paragraph and paragraph 2 below “mortgage”, in relation to property situated in Scotland, means a heritable security within the meaning of section 9 of the [1970 c. 35.] Conveyancing and Feudal Reform (Scotland) Act 1970, and “mortgagee”, in relation to such property, means the creditor under the heritable security.

2 (1) The following provisions of this paragraph apply in the circumstances mentioned in paragraph 1(1) above.

(2) If at the time when the depreciation payment is made the debt secured by the mortgage (other than any part of it representing costs for which the mortgagee would not be entitled to credit) has been paid in full, the depreciation payment shall be disposed of as if the interest had not been subject to the mortgage.

(3) If the interest was subject to two or more successive mortgages, paragraph 1 above shall have effect with the substitution for references to the mortgagee of references to the first mortgagee or, if sub-paragraph (2) above has effect in relation to the first mortgage, to the second mortgagee, and so on.

(4) Paragraph 1 above shall have effect in any case, as regards any mortgage, subject to any agreement between the mortgagee and the person who apart from that mortgage would have been entitled to receive the depreciation payment or part of that payment.

Rentcharges

3 (1) The Secretary of State may by regulations make provision as to the person to whom a depreciation payment or any part of it is to be paid in cases where the interest in the property in question of a person to whom, apart from this paragraph or paragraph 4 below, the whole or part of the payment would fall to be paid was at the relevant time subject to a rentcharge.

(2) In this paragraph “rentcharge” means—

(a) in relation to property situated in England and Wales, any annual or other periodic sum charged on or issuing out of land, except rent reserved by a lease or tenancy and any sum payable by way of interest;

(b) in relation to property situated in Scotland, a feuduty or a ground annual.

Settlements etc.

4 (1) Where in the case of property situated in England and Wales the interest in the property of the person to whom, apart from this sub-paragraph, the whole or part of a depreciation payment would fall to be paid is—

(a) subject to a settlement; or

(b) otherwise held in such manner that the person entitled to the interest would not be competent to give an effective discharge for the proceeds of a sale of the interest,

that payment or that part of that payment shall be paid to the person competent to give such a discharge.

(2) Where in the case of property situated in Scotland the interest in the property of the person to whom the whole or part of a depreciation payment falls to be paid is subject to—

(a) a trust within the meaning of the [1921 c. 58.] Trusts (Scotland) Act 1921; or

(b) an entail or a life-rent,

that person shall hold and apply that payment or that part of that payment in like manner as if the interest had been acquired under compulsory powers and the payment or that part of it were the purchase money or compensation for that interest.

Effect of devises or bequests

5 Where the interest in the property in question of the person to whom the whole or part of a depreciation payment falls to be paid, or the proceeds of sale of that interest, are the subject of a devise or bequest, that devise or bequest shall be treated as including that payment or that part of that payment.

Sale and compulsory acquisition

6 (1) Where the interest in the property in question of the person to whom the whole or part of a depreciation payment falls to be paid is the subject of—

(a) a contract of sale made before the relevant time; or

(b) a notice to treat served before that time under an enactment authorising the compulsory acquisition of the interest,

that payment or that part of that payment shall (subject to sub-paragraph (2) below) be held by that person in trust for the purchaser unless the contract is rescinded or the notice ceases to have effect.

(2) Any lien upon that interest to which that person is entitled by virtue of the contract shall extend to that payment or that part of that payment.

(3) In the application of sub-paragraph (1) above to Scotland, the reference to the service of a notice to treat includes a reference to the deemed service of such a notice.

Section 21(1).

SCHEDULE 3 Property Belonging to Protected Tenants

Protected tenant treated as liable to make good the damage

1 (1) Subject to paragraph 2 below, the protected tenant shall be treated for the purposes of this Part of this Act—

(a) as a person liable to make good the whole of the damage to the property; or

(b) in the circumstances mentioned in sub-paragraph (2) below, as a person liable to meet such part of the cost of making good the whole of that damage as is given by the formula mentioned in sub-paragraph (3) below.

(2) The circumstances referred to in sub-paragraph (1)(b) above are that, by reason of any other enactment contained in the relevant Act or Acts, compensation in respect of the damaged property would have been payable to the protected tenant of less than the amount provided for by whichever of the following enactments would otherwise have been applicable, namely—

(a) section 1(1) of the [1927 c. 36.] Landlord and Tenant Act 1927;

(b) section 66(1) of and paragraph 2(1) of Part I of Schedule 9 to the [1986 c. 5.] Agricultural Holdings Act 1986;

(c) sections 38 and 49(1) of the [1949 c. 75.] Agricultural Holdings (Scotland) Act 1949;

(d) so much of section 10 of the [1886 c. 29.] Crofters Holdings (Scotland) Act 1886 as precedes the proviso; and

(e) section 6(2) of the [1961 c. 58.] Crofters (Scotland) Act 1961.

(3) The formula referred to in sub-paragraph (1)(b) above is—

(4) Any question arising under this paragraph in relation to any property—

(a) as to whether or not any person is a protected tenant; or

(b) as to the amount of any compensation which would have been payable to him under the relevant Act or Acts,

shall be determined in like manner as if it had arisen under the relevant Act or Acts.

Circumstances in which Schedule applies

2 (1) Where in the case of any damaged property—

(a) it is claimed that a person who, apart from the provisions of this Schedule, is neither the owner of, nor liable to make good in whole or in part the damage to, the property falls to be treated as so liable by virtue of paragraph 1 above; and

(b) a damage notice is given in respect of the property, whether by that or any other person,

that person shall not be treated as so liable except in the circumstances mentioned in sub-paragraph (2) below.

(2) The circumstances referred to in sub-paragraph (1) above are—

(a) that it is agreed between the person in question and his landlord before the end of the period of one month beginning with the first giving of a damage notice in respect of the property, or it is determined in proceedings by virtue of paragraph 1(4) above begun before the end of that period, that he is a protected tenant and the property belongs to him; and

(b) that notice of that agreement or of the beginning of those proceedings has been given to the Corporation before the end of that period.

(3) Where the liability of the Corporation to comply with any requirement of this Part of this Act in consequence of the giving of a damage notice depends on the determination of the question whether or not a person falls to be treated as liable as mentioned in sub-paragraph (1) above, the Corporation shall not be required to comply with that requirement until it is established in accordance with the provisions of that sub-paragraph whether or not that person falls to be so treated.

(4) For the purposes of sub-paragraph (2) above, proceedings to determine by arbitration whether or not a person is a protected tenant by virtue of the [1986 c. 5.] Agricultural Holdings Act 1986 or the [1949 c. 75.] Agricultural Holdings (Scotland) Act 1949 shall be deemed to be begun when either—

(a) an arbitrator or, as the case may be, an arbiter has been appointed by agreement between that person and his landlord; or

(b) an application for the appointment of an arbitrator or, as the case may be, an arbiter has been made by that person or his landlord to the President of the Royal Institution of Chartered Surveyors or, as the case may be, the Secretary of State.

Supplemental

3 The following enactments, namely—

(a) section 8(1) of the [1911 c. 49.] Small Landholders (Scotland) Act 1911 other than the provisos (which provides that an agreement for a loan by the Secretary of State to a landholder shall effect a transfer to the Secretary of State of all rights of the landholder to compensation for permanent improvements); and

(b) section 23(3) of the [1955 c. 21.] Crofters (Scotland) Act 1955 (which makes corresponding provision in relation to an agreement for a loan by the Secretary of State to a crofter),

shall have effect as if the references to such compensation included references to any amount payable to a landholder or crofter by virtue of this Schedule.