OVERREACHING LAND LAW PDF

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LAND LAW BY QAYYUM...

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"The principles of overreaching is a significant concept in law. It upholds the mirror and curtain principles and relieves the need of third party purchasers to physically inspect the land". Critically evaluate the applications of the principle and its potential complexities in land law The traditional system of unregistered conveyancing had no national record of the ownership of the property other than the deed themselves. Indeed the early transfer of property was not even required to be made in writing. The system was open and sometimes it will lead to misuse and fraud. The first successful piece of legislation introducing the title was passed in 1862 but the first meaningful legislation was the Land Transfer Act of 1875 which introduced the idea of a single Land Register. However, this act of land registration was voluntarily and in 2002 they pass the Land Registration Act 2002 and it is the beginning of compulsory system of land registry system in the UK. It is important to understand that the concept of overreaching in Land Registration System. According to S4 (2) of Land Registration Act 2002 the legal titles capable of substantive registration are fee simple absolute in possession and leases which at the date of creation of transfer or creation have more than 7 years to run. The registration system in the UK is based on the three ‘golden’ principle that is the mirror principle, the insurance principle and the curtain principle. Lets take a look at the first principle and that is the mirror principle in which the register of land should provide a mirror of the title, basically the register is an accurate and conclusive reflection of ownership of the title. An overriding interest is one of the flaw of the mirror principle. An overriding interest is one which is binding on a purchaser who may not know about its existence because there is not requirement to register it. The next principle is the insurance principle in which the accuracy of the Register is guaranteed and if the register is found to be inaccurate it will be altered or ratified. The next principle is the curtain principle in which the purchaser of the land is nor concerned with matters behind the entries on the register. This principle also describe the overreaching mechanism introduced by s2 of the Land Property Act 1925. This mechanism of overreaching ensures that the purchaser of land who satisfy the conditions of overreaching will not be bound by the interest of beneficiaries under a trust. The interest of the beneficiaries are kept “behind the curtain”. To overreach the interest of beneficiaries under trust, the purchaser must pay the purchase money to at least two trustee. When overreaching has occurred, the interest of the third party are not lost but are attached to the sale proceeds received by the trustees instead of to the land. The concept of equitable interest are converted from the interest to the land to the interest in money. This will allow the land to be sold free from the rights of the beneficiary. The curtain principle will not apply if there is only one beneficiary as the trust cannot be overreached. This can be seen in the case of Williams & Glyn’s Bank V Boland in which the husband own a legal title of a matrimonial home. The wife ha equitable interest in the land as she made contribution to the purchase. The husband has taken a loan form Glyn’s Bank who had executed a charge over the property. The wife was not aware of the loan and did not have consent to the loan and when the husband failed to make repayment bank claim right to sell the property. The right of the wife had not been overreach as

because the ‘sale’ has been made by a sole trustee which is the husband and the wife right to remain in the house was upheld. The root of controversy surrounding overreaching is the two competing policy interest of ensuring the simplicity of conveyancing whilst providing protection for the beneficiaries. It can be seen in form of historical context that the law of overreaching was formulated in order to address a pressing social need and that the abolishing the doctrine of notice and introducing a system of overreaching was necessary tool in order to make conveyancing much more simpler and more accessible for all. The Law Commission in 1989 listed a few problem regarding the law of overreaching. Firstly, the financial protection was inappropriate for the occupier who only really care about enjoying their home rather than the money. Next is that the beneficiaries who think they are “joint owners” in reality should be given equal ownership rights with trustees at law. Next is that overreaching is actually inconsistent with the effect of the Matrimonial Home rights It seems that it is necessary to consider that the merit of overreaching over the criticism that it is facing. The most significant criticism on overreaching is that it can lead to unduly harsh consequences for the beneficiaries. This is because overreaching takes priority over statutory overriding interest and because it applies even where the trustees have acted outside of their powers or even against a beneficiary wish. This can be seen in the case of City of London Building Society V Flegg in which a husband, wife and wife parents jointly contributed to the purchase of their home. The young couple were the only ones registered in the title and they later used the house as a security for a loan. Later the bank seeking to repossessed the house as they cannot pay the loan and free from the parents equitable rights. The House of Lords held that overreaching would still apply even beneficiaries possessed statutory overriding interests. Lord Templeman held that an overriding interest cannot interfere with overreaching because it is simply “extinguished” at the point the deal is made before overreaching even takes effect. Academician suggested that this conclusion was reached “not as a result of rigorous mechanistic statutory construction but for policy reasons”. While it can be said that the criticism might be true but the judgement confirms to us that a beneficiary interest can only be transferred to the sale proceeds and not enforce against a purchaser. For a policy point of view, the lords view was that to hold a mortgage company as being subject to the rights of actual occupiers would frustrate the compromise between “the interest of the public securing that the land held in trust is freely marketable and the interest of the beneficiaries in possessing their rights under the trust.

In conclusion, it is clear that the law of overreaching is there to simplify and ease the process of conveyancing. It can also be argued and agreed among academician that the law is more favourable towards the purchaser rather than the beneficiary. The law indeed protect the interest of the party purchaser provided that that have paid the purchase money to the two or more trustee or more....