City of London Building Society v Flegg

January 22, 2024
Micheal James

Jurisdiction / Tag(s):

Introduction to City of London Building Society v Flegg

Bleak House, nestled in the charming English countryside, held promise not just for shelter but for family ties and shared dreams. It became the stage for a legal drama that would reverberate through English land law, a battle over property rights fought not on bloodlines but on financial ink and the intricacies of legal concepts. In this legal labyrinth, the “City of London Building Society v Flegg” case unfolded, challenging the balance between protecting lenders and safeguarding unacknowledged claims on land.

Facts and Figures:

The Maxwell Browns, a couple yearning for their idyllic abode, sought the financial support of their daughter and son-in-law, the Fleggs. While the Maxwell Browns became the registered owners of Bleak House, the Fleggs generously contributed a substantial sum towards the purchase. They even resided in the house, weaving their lives into its very fabric. However, harmony soon gave way to discord when financial woes engulfed the Maxwell Browns. Unable to service their mortgage, they defaulted, leaving the Building Society seeking to repossess Bleak House.

The Legal Tussle:

With the house facing legal jeopardy, the Fleggs stepped forward, staking their claim. They argued that their financial contribution established a “constructive trust,” an equitable interest in the property. This, they reasoned, qualified as an “overriding interest” under the Land Registration Act 1925, a powerful defense against the Building Society’s claim. In essence, the Fleggs argued that their silent yet crucial role in acquiring the house could not be simply erased by a defaulted mortgage.

The Building Society, armed with the legal tool of “overreaching,” countered the Fleggs’ claim. Overreaching essentially severs the link between an equitable interest and the land itself, attaching it instead to the purchase money. In this case, the Building Society asserted that the mortgage money had been paid to solicitors acting as trustees, thereby overreaching the Fleggs’ interest. Bleak House, they argued, was rightfully theirs to reclaim.

The Judgment and its Echoes:

The House of Lords, the highest court in the land, delivered a complex verdict that sent shockwaves through the legal landscape. While acknowledging the Fleggs’ genuine interest in the property, the court sided with the Building Society. They reasoned that:

  • The Fleggs’ contribution did indeed create a valid equitable interest.
  • However, this interest was susceptible to overreaching, and the transfer of mortgage money fulfilled that requirement.
  • Once overreached, the Fleggs’ interest became detached from the land and attached only to the proceeds of any future sale, ceasing to be an overriding interest.


The City of London Building Society v Flegg case remains a contentious landmark in English land law. While it solidified the power of overreaching for lenders, it also sparked concerns about the vulnerability of unregistered interests. The case continues to cast a long shadow, prompting ongoing debates about balancing competing claims in an ever-evolving property landscape. The tale of Bleak House serves as a stark reminder that the walls of our homes hold not just bricks and mortar, but legal complexities that can unravel the best-laid plans and leave even the most deserving claims hanging in the balance.

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