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overreaching


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N.

The process by which interests in land are converted on sale of the land into corresponding interests in the capital money arising from the sale.

Where land is held on a trust of land, the law of Property Act 1925 provides that a purchaser of the land shall take free of the beneficiaries' interests, provided that the purchase money is paid to at least two trustees or a trust corporation (City of London Building Society v Flegg [1988] AC 54 (HL). A mortgagee exercising his power of sale is able to overreach the mortgagor's estate and equity of redemption and convey the land free from the equitable right: the mortgagor's rights are transferred to the purchase money, the mortgagee being trustee of any such funds remaining after paying off the mortgage debt. A sale by the tenant for life of settled land also overreaches the interests of the beneficiaries.

Overreaching in general affects only equitable rights.

Subjects: Law.


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