Legal Case Summary
City of London Building Society v Flegg [1988] AC 54, HL
Overreaching and overriding interests.
Facts
Here, the Maxwell Browns purchased a property, attaining half of the cost form Mrs Maxell Brown’s parents, the Fleggs. The property was placed solely under the Maxwell Brown’s name with both the Browns and the Fleggs in actual occupancy. Later, in breach of the trust created from the Fleggs’ lending of money, the Maxwell Browns sought a mortgage for the property from the claimant which they ultimately defaulted on repayments for, and so the claimant sought to repossess the house. The Fleggs attempted to halt this, claiming an overriding interest per the 1925 Land Registration Act s.70(1)(g), reasoning that they held a beneficial interest in the property arising from their contribution to the purchase price and were in actual occupation. In response, the claimants submitted this right had been overreached as the purchase contribution had been given to the Maxwell Browns as trustees.
Issue
Whether contribution to purchase price and actual occupation can amount to an overriding interest, or whether such rights can be overreached.
Decision / Outcome
Whilst at first instance the Court found for the claimant, the Court of Appeal found for the Fleggs. Upon final appeal, the House of Lords found for the claimant, viewing that the Fleggs’ rights in the property per se had been overreached, and thus their rights attached to the property’s sale value. In the leading judgment, Lord Oliver emphasised the risks to financial institutions of ‘unsuspected hazards’ should they be bound by unregistered rights.
Updated 21 March 2026
This case summary remains legally accurate. City of London Building Society v Flegg [1988] AC 54 is still good law and continues to be the leading authority on the relationship between overreaching and overriding interests in registered land.
One important point for readers to note: the article refers to the Land Registration Act 1925 s.70(1)(g), which was the provision in force at the time of the case. That Act has since been repealed and replaced by the Land Registration Act 2002. The equivalent provision governing overriding interests of persons in actual occupation is now found in Schedule 3, paragraph 2 of the 2002 Act (for registered dispositions) and Schedule 1, paragraph 2 (for first registration). The core principle established in Flegg — that overreaching can defeat what would otherwise be an overriding interest, provided the requirements of overreaching are met (including payment of capital money to at least two trustees or a trust corporation under s.2 of the Law of Property Act 1925) — remains unchanged under the current statutory framework and has been consistently applied in subsequent case law, including by the Supreme Court in Baker v Craggs [2018] EWCA Civ 1126 and related decisions. Students should therefore read the statutory references in this article in their historical context and refer to the 2002 Act for current law.
