3(1)Where the authority has vested the house in itself under paragraph 1, it shall appropriate a fund equal to the aggregate of—E+W
(a)the amount agreed between the authority and the mortgagor or determined by the district valuer as being the amount which under sub-paragraph (2) is to be taken as the value of the house at the time of the vesting, and
(b)interest on that amount, for the period beginning with the vesting and ending with the appropriation, at the rate prescribed for that period under section 32 of the M1Land Compensation Act 1961 (rate prescribed for compulsory purchase cases where entry is made before compensation is paid).
(2)The value of the house at the time of the vesting shall be taken to be the price which, at that time, the interest vested in the authority would realise if sold on the open market by a willing vendor on the assumption that any prior incumbrances to which the vesting is not made subject would be discharged by the vendor.
(3)The fund shall be applied in the following order—
(a)in discharging, or paying sums into court for meeting, any prior incumbrances to which the vesting is not made subject;
(b)in recovering the costs, charges, and expenses properly incurred by the authority as incidental to the vesting of the house;
(c)in recovering the mortgage money, interest, costs and other money (if any) due under the mortgage;
(d)in recovering any amount which falls to be paid under the covenant required by section 35 or 155 (repayment of discount, etc. on disposal) or paragraph 6 of Schedule 8 (terms of shared ownership lease: payment for outstanding share on disposal) or any provision of the conveyance or grant to the like effect;
and any residue then remaining in the fund shall be paid to the person entitled to the mortgaged house, or who would have been entitled to give receipts for the proceeds of sale of the house if it had been sold in the exercise of the power of sale.
(4)Section 107(1) of the M2Law of Property Act 1925 (mortgagee’s written receipt sufficient discharge for money arising under power of sale) applies to money payable under this Schedule as it applies to money arising under the power of sale conferred by that Act.