E-lawresources
Providing resources for studying law
 
Custom Search
 
   Home      State Bank of India v Sood

 

State Bank of India v Sood [1997] Ch 276

The first and second defendants were the registered proprietors of the family home and held the property on trust for themselves and the third to seventh defendants. The registered proprietors mortgaged the property to discharge their present and future indebtedness of their company Sobel Textiles ltd. They failed to keep up the repayments and the State Bank of India bank brought proceedings seeking possession. The third to fourth defendants defended on the basis of their beneficial interests which could not be overreached since no capital money was paid to two trustees as required under 27(2) Law of Property Act 1925.

Held:

The beneficial interests had been overreached. S.27(2) only applies where the conveyance gives rise to capital moneys. If there are no capital moneys there is no obligation to make payment to two trustees.

Peter Gibson LJ:

"Much though I value the principle of overreaching as having aided the simplification of conveyancing, I cannot pretend that I regard the resulting position in the present case as entirely satisfactory. The safeguard for beneficiaries under the existing legislation is largely limited to having two trustees or a trust corporation where capital money falls to be received. But that is no safeguard at all, as this case has shown, when no capital money is received on and contemporaneously with the conveyance.”

Back to lecture outline on overreaching in land law