Overreaching by a mortgagee
Produced in partnership with Amanda Eilledge of Hardwicke Chambers
Overreaching by a mortgagee

The following Restructuring & Insolvency practice note Produced in partnership with Amanda Eilledge of Hardwicke Chambers provides comprehensive and up to date legal information covering:

  • Overreaching by a mortgagee
  • Buyer’s requirements
  • Overreaching—statutory provisions
  • Charges and encumbrances
  • Practice
  • Priorities
  • The transfer by the mortgagee
  • Cancellation of entries in the register
  • Later estate contracts
  • Later leases and tenancies

Overreaching is a statutory mechanism available to a mortgagee (amongst others) to confer title on the buyer free from charges and encumbrances ranking subsequent to the mortgagee’s security. Overreaching is also available in receivership sales, by ensuring that the mortgagee, rather than the receiver executes the transfer of the property to the buyer.

Overreaching can also occur in the context of a mortgagee taking security for repayment of a loan from the trustees of a trust. The mortgagee will be concerned that the security document granted to it by the trustee will overreach the beneficial interest of the beneficiaries of the trust. This is covered in the Practice Notes: Enforcement issues for trust property and Overreaching—sales by trustees of land.

Buyer’s requirements

When taking an appointment, a receiver should consider the requirements of a potential buyer. Usually, a buyer will want to acquire a property free from any charges, including the charge in favour of the selling mortgagee and any other charges registered on the title.

The problem is how to satisfy a buyer where the net sale proceeds are insufficient to redeem any charges ranking after the appointing mortgagee’s charge (prior charges must be redeemed unless the buyer is purchasing subject to them); this is where overreaching comes to the aid of the receiver.

Overreaching—statutory provisions

Overreaching is a statutory mechanism contained in the Law of Property Act

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