Process of Overreaching

Process of Overreaching

In the context of property law in England and Wales, overreaching is a process that occurs during the sale of a property subject to a trust. It refers to the legal mechanism by which the interests of beneficiaries in the property are overreached or set aside when the property is sold or conveyed to a buyer.

The process of overreaching typically involves two key elements:
  1. Two trustees: For overreaching to take place, there must be at least two trustees who hold the legal title to the property. The trustees are typically individuals appointed to manage and administer the property on behalf of the beneficiaries.
  2. Payment to trustees: When the property is sold, the buyer pays the purchase price to the trustees, rather than to the beneficiaries directly. This payment is made with the understanding that it will be used to discharge any outstanding debts or obligations of the trust and to distribute the remaining funds to the beneficiaries in accordance with their respective interests.

The purpose of overreaching is to protect the interests of the buyer by ensuring that they obtain good and marketable title to the property, free from any undisclosed claims or interests of the beneficiaries. By paying the purchase price to the trustees, the buyer can acquire the property without the need to individually negotiate with or obtain the consent of each beneficiary.

Overreaching is typically facilitated through the execution of a deed of overreaching, which is signed by the trustees and the buyer. This deed serves as evidence that the buyer has fulfilled their obligation to pay the purchase price and that the interests of the beneficiaries have been appropriately overreached.

The process of overreaching only applies to properties subject to a trust and does not apply to properties owned solely by an individual. Additionally, overreaching does not extinguish the beneficiaries' underlying equitable interests in the trust property but rather transfers those interests to the proceeds of the sale.
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