10Mortgages, trusts for sale and settlements
(1)Where an interest is subject to a mortgage—
(a)a claim may be made by any mortgagee of the interest as if he were the person entitled to that interest but without prejudice to the making of a claim by that person;
(b)no compensation shall be payable in respect of the interest of the mortgagee (as distinct from the interest which is subject to the mortgage);
(c)any compensation which is payable in respect of the interest which is subject to the mortgage shall be paid to the mortgagee or, if there is more than one mortgagee, to the first mortgagee and shall in either case be applied by him as if it were proceeds of sale.
(2)Where the interest is held on trust for sale the compensation shall be dealt with as if it were proceeds of sale arising under the trust.
(3)Where the interest is settled land for the purposes of the [1925 c. 18.] Settled Land Act 1925 the compensation shall be treated as capital money arising under that Act.
(4)Where an interest in land is vested in trustees (other than a sole tenant for life within the meaning of the [1925 c. 18.] Settled Land Act 1925) and a person beneficially entitled (whether directly or derivatively) under the trusts is entitled or permitted by reason of his interest to occupy the land, section 2 above shall have effect as if occupation by that person were occupation by the trustees in right of the interest vested in them.
(5)In the application of this section to Scotland—
(a)in subsection (1) for the references to a mortgage and a mortgagee there shall be substituted respectively references to a heritable security and a heritable creditor;
(b)for subsections (2) and (3) there shall be substituted the following subsection—
“(2)Where the interest is that of any of the persons specified in section 67 of the [1845 c. 19.] Lands Clauses Consolidation (Scotland) Act 1845, that Act shall have effect with regard to the application of the compensation as it has effect with regard to the application of the compensation payable in respect of the purchase of land”;
(c)in subsection (4) the words " (other than a sole tenant for life within the meaning of the Settled Land Act 1925) " shall be omitted.