(1)This section applies where—
(a)a house is purchased at site value in accordance with section 585 (site value compensation for unfit houses), or
(b)is vacated in pursuance of a demolition or closing order under section 265 (unfit houses beyond repair at reasonable cost), or
(c)might have been the subject of such a demolition order but is vacated and demolished in pursuance of an undertaking for its demolition given to the local housing authority.
(2)Where this section applies and a relevant interest in the house is subject to a mortgage or charge, or to an agreement to purchase by instalments, either party to the mortgage, charge or agreement may apply to the county court which may, after giving the other party an opportunity to be heard, make an order—
(a)in the case of a house which has been purchased compulsorily, discharging or modifying any outstanding liabilities of the holder of the interest by virtue of any bond, covenant or other obligation with respect to the debt secured by the mortgage or charge or by virtue of the agreement, or
(b)in the case of a house vacated in pursuance of a demolition or closing order, or of an undertaking, discharging or modifying the terms of the mortgage, charge or agreement,
and in either case either unconditionally or subject to such terms and conditions, including conditions with respect to the payment of money, as the court may think just and equitable to impose.
(3)An interest is a relevant interest for the purposes of this section if—
(a)a payment in respect of it falls to be made under Part I of Schedule 24 (payments in respect of owner-occupied houses), and
(b)it is subject to the mortgage, charge or agreement, at the date when the house is purchased compulsorily or, as the case may be, vacated.
(4)An interest is also a relevant interest for the purposes of this section if—
(a)it is an interest in right of which, at the date of the making of the compulsory purchase or other order, or the giving of the undertaking, a person occupies the whole or part of the house as a private dwelling, and
(b)that person continues to own the interest until the end of the period mentioned in subsection (5), and
(c)the interest is subject to the mortgage, charge or agreement throughout that period.
(5)The period referred to in subsection (4) is the period from the date of the making of the compulsory purchase or other order, or the giving of the undertaking to—
(a)in the case of a compulsory purchase order, the date of service of notice to treat (or deemed notice to treat) for purchase of the interest or, if the purchase is effected without service of notice to treat, the date of completion of the purchase, and
(b)in the case of any other order or of an undertaking, the date of vacation of the house in pursuance of the order or undertaking,
or, if the owner of the interest died before the date specified in paragraph (a) or (b), to the date of death.
(6)In this section—
“house” includes any building constructed or adapted wholly or partly as, or for the purposes of, a dwelling; and
“interest” in a house does not include the interest of a tenant for a year or any less period or of a statutory tenant.