Do you know that when a property is owned by two or more people, they hold the property on a “trust of land”, where the legal estate of the property is held on trust for the beneficial owners? So, who are the so-called “beneficial owners”? If you hold a property as beneficial tenant in common, the beneficial owners can be anyone you intended to pass the property onto under a Will after your death, or the property will pass to your families under intestacy rules.

What is overreaching

• Where the property is held as beneficial tenant in common, overreaching is a process to transfer the beneficial interests of the property into the capital money, whereby the trustees will convey the legal estate to a purchaser in good faith in exchange for capital money.
• Overreaching allows a person holding the beneficial interests to have the value of the land (ie: receive monies from the proceed of sale) but not the land itself.

Death of a beneficial tenant in common

• Where the beneficial interests in the property is held as tenants in common, the deceased co-owner’s share will pass to their estate according to the deceased’s will or the intestacy rules.

• However, if the property is to be sold in return of capital money to be paid to the beneficiaries, the process of overreaching will be triggered. Where deceased’s beneficial interest passes to a third party (not the surviving owner), a second trustee needs to be appointed to sell the property in order to overreach the deceased’s equitable interest. After that, the beneficiaries will receive monies from the proceed of sale instead of the land itself.

• If there is more than one surviving tenant in common and there are sufficient survivors to overreach the deceased’s equitable interest, there will be no need to appoint an additional trustee on the sale of the property.