Priorities and overreaching

English land law resolves competing claims through two sequential mechanisms: overreaching transmutes equitable interests from land into capital money when trustees receive purchase money (ss 2, 27 LPA 1925); priority then determines which remaining interests bind a disponee. In registered land, priority depends on registration date (s 28 LRA 2002), entry on register, or overriding status (Sch 3). Unregistered land applies nemo dat, the bona fide purchaser rule, and land charges registration. The critical analytical sequence: first ask if overreaching applies (trust of land? two trustees? capital money paid?); if yes, the interest is gone from the land. If no, apply priority rules. This sequential approach prevents the common error of treating overreaching as merely another priority rule when it actually removes interests from the priority contest entirely.

City of London Building Society v Flegg [1988] AC 54: Payment to two trustees overreaches beneficial interests automatically 'by force of statute', even if beneficiaries occupy and trustees breach duties. The interest shifts to proceeds; no overriding interest can arise in land that's been overreached. Establishes overreaching as threshold question before priority.

Williams & Glyn's Bank Ltd v Boland [1981] AC 487: Beneficial interest plus actual occupation creates overriding interest binding purchaser who made no inquiries. Transformed conveyancing practice by requiring inquiry of all occupiers, not just registered proprietor.

Midland Bank Trust Co Ltd v Green [1981] AC 513: Unregistered land charge void against purchaser regardless of actual knowledge or bad faith. Statutory nullity operates independently of notice—'clear and definite' per Lord Wilberforce.

Abbey National Building Society v Cann [1991] 1 AC 56: Simultaneous purchase and mortgage are indivisible; no 'scintilla temporis' exists for occupation-based interest to arise between them. Actual occupation must exist at date of disposition, not merely moving in.

State Bank of India v Sood [1997] Ch 276: Overreached interest cannot be overriding—'nothing on which paragraph can bite'. Confirms Flegg: overreaching removes interest from land entirely.

Courts follow strict analytical sequence:

Step 1: Overreaching? Identify: (i) trust of land exists; (ii) capital money paid to minimum two trustees/trust corporation (s 27 LPA 1925); (iii) interest is beneficial under trust (not charge/easement). If all met, interest overreached—stop here.

Step 2: If no overreaching, apply priority. In registered land: Check if interest (i) protected by register entry; (ii) overriding under Sch 3 para 2 (actual occupation + no inquiry/disclosure defence) or para 3 (legal easements); (iii) neither—then s 29 disponee takes free. In unregistered land: Land charge? If registrable but unregistered, void. If not registrable (trust interests), apply notice doctrine—bona fide purchaser without actual/constructive notice takes free.

Key tests: 'Actual occupation' = physical presence as fact (narrowly construed post-2002). Sch 3 defences require disponee to show either inquiry made and not answered, or occupation not obvious on reasonable inspection plus no actual knowledge.

Conflating overreaching with priority: These operate sequentially, not alternatively. Overreaching removes interest from land before priority questions arise.

Forgetting two-trustee requirement: Single trustee cannot overreach even with trust of land—must identify joint receipt.

Wrong title system: Registered land uses LRA 2002 (registration/overriding interests); unregistered uses LCA 1972 (land charges) and notice doctrine. Match rules to facts.

Misapplying Cann: Simultaneous purchase-mortgage means no gap for occupier's interest to arise and bind mortgagee.

Assuming all interests overreachable: Only beneficial interests under trusts—not easements, charges, or contractual rights.

Importing notice into registered land: S 29 LRA 2002 excludes notice except within narrow Sch 3 defences.