State Bank of India v Sood [1999] 1 All ER 169

Court: Court of Appeal

Basic Facts: Trustees charged a house to a bank as security. The bank later assigned the mortgage to a third party. Beneficiaries with interests in the property argued that their interests were not properly considered due to overreaching.

Issue for the Court: What happens to those with beneficial interests when they are overreached by trustees?

Held: The court ruled that beneficiaries under a trust cannot block a mortgagee's sale unless their interests were registered and protected.

Gibson LJ:

• Overreaching transfers the beneficiaries’ interests from the land to the equity of redemption.

• Section 2(1)(ii) of the Law of Property Act 1925 requires payment of capital money, but this is not applicable when no capital money is involved in the transaction.

• Purchasers are not responsible for ensuring trustees have consulted beneficiaries, who can seek remedies in equity.