In co-ownership, what is the effect of overreaching on registration of a transfer?

• A. The beneficial interests are overreached and pass to the purchaser.
• B. Beneficial interests are extinguished.
• C. The transfer cannot proceed.
• D. Overreaching has no effect on registration.

Answer: (A)

Overreaching happens when trust property in land is sold by trustees to a purchaser for value, and there are at least two trustees (or a trust corporation) holding the legal title. In that situation, the beneficiaries’ equitable interests are detached from the land and attached to the sale proceeds instead. So, when the transfer is registered, the purchaser obtains the legal title free from those interests; the beneficiaries’ rights move to the sale proceeds rather than to the land itself. This is why the correct outcome is that the beneficial interests are overreached and pass to the purchaser—the land registers show the buyer as the owner, and the beneficiaries’ interests become a claim on the sale proceeds.