The Curtain Principle and Why Beneficiaries Need More Than Just a Form A
In English land law, the curtain principle is a cornerstone of the land registration system. It makes life simple for buyers but creates a challenge for beneficiaries who want to safeguard their interests. Let’s unpack how it works and why a standard Form A restriction is often not enough protection.
The Curtain Principle – Hiding Beneficial Interests
The curtain principle says that equitable (beneficial) interests under a trust remain hidden behind the “curtain” of the legal title. The Land Registry only shows the legal owners, the trustees, on the register.
For conveyancing, this is a huge efficiency: a buyer doesn’t have to investigate who all the beneficiaries are. They can simply deal with the legal owners, pay the purchase price to at least two trustees (or a trust corporation), and rely on overreaching to transfer any beneficial rights from the land onto the sale proceeds.
That curtain is great for speed and certainty, but less so for beneficiaries. Their rights don’t appear automatically on the register, so unless extra steps are taken, they can be “swept aside” on sale.
Case Example: Overreaching in Action
The starkest illustration comes from City of London Building Society v Flegg [1988].
Mr and Mrs Maxwell (parents) held the legal title to a family home, but their daughter and son-in-law (the Fleggs) had contributed to the purchase price.
In equity, the Fleggs were beneficiaries under a trust of land. The parents mortgaged the property, later defaulted, and the lender sought possession.
Because the mortgage advance was paid to two trustees (the parents), the Fleggs’ equitable interests were overreached. Their beneficial rights in the land were swept away and transferred into the mortgage monies, which had already been spent.
The outcome: the Fleggs lost their home, even though they had a genuine equitable share.
This case shows how powerful the curtain principle can be, it allows equitable rights to be overridden in favour of transactional certainty.
Beneficiaries Beware: Your Rights Can Be Swept Away
When trustees sell, the beneficiaries’ equitable rights are not destroyed — but they are converted.
They are swept off the land itself and transferred onto the sale proceeds.
This can happen automatically under the law of overreaching, even without the beneficiaries knowing about the sale until after it has happened.
This is why relying on a standard Form A restriction isn’t enough if beneficiaries want more than just a right to the money.
Form A Restrictions – The Default Position
When a property is held on trust (for example, by co-owners as tenants in common), the Land Registry often enters a Form A restriction on the proprietorship register.
This restriction prevents a sole legal owner from disposing of the property alone, it forces the involvement of at least two trustees or a trust corporation. That way, beneficiaries are safeguarded through overreaching: their interest isn’t destroyed, it moves into the sale money.
However, a Form A restriction doesn’t give beneficiaries a veto. It doesn’t stop the trustees from selling; it simply ensures that the sale will be valid and that their rights attach to the proceeds. Beneficiaries who want to retain the property itself, rather than just the cash value, need something stronger.
Beneficiaries’ Protection – Beyond the Curtain
Here’s where additional restrictions come in. Because of the curtain principle, beneficiaries who want to prevent a sale altogether, or at least have a say in whether it goes ahead, must register a bespoke restriction.
For example:
A Form B restriction or a custom restriction might state that “no disposition is to be registered without the consent of [named beneficiary].” This gives the beneficiary a genuine approval right, rather than leaving them reliant on trustees honouring the trust behind the curtain.
Without this, trustees could sell, overreaching would occur, and the beneficiaries would find themselves with rights against the proceeds, but no control over the land itself.
Case Example: When Overreaching Fails
Contrast this with Williams & Glyn’s Bank v Boland [1981]:
Mr Boland was the sole registered proprietor of the matrimonial home. His wife, Mrs Boland, had contributed substantially to its purchase and therefore held an equitable interest. He mortgaged the house without telling her. Because the advance was paid to only one trustee, overreaching did not apply. Mrs Boland was also in actual occupation, so her equitable interest bound the bank.
The outcome: the bank lost — Mrs Boland’s rights stayed with the land and defeated the lender’s claim.
This case highlights that where there is only one trustee, equitable interests remain firmly attached to the land. Purchasers and lenders cannot rely on the curtain principle alone.
A Potential Protective Solution: One Trustee Only
Given the risks illustrated by Flegg, one possible strategy to protect beneficiaries is to ensure that only one trustee is registered on the legal title.
If there is only one trustee, overreaching cannot operate. Beneficiaries’ equitable interests remain “on the land.” A buyer or lender takes subject to those interests, just as in Boland.
This can prevent beneficiaries from being stripped of their rights without their knowledge. The trust still exists, the beneficiaries’ equitable ownership is unchanged. But the property cannot be freely sold or mortgaged unless another trustee is appointed, because purchasers and lenders will not risk taking subject to unknown equitable claims.
In practice, most titles will carry a Form A restriction if held on trust, requiring the appointment of a second trustee before any disposition can be registered. This ensures overreaching can occur for transactional certainty. However, until a co-trustee is appointed, beneficiaries’ rights remain firmly attached to the land.
Conclusion: Balance Between Protection and Saleability
The curtain principle and overreaching are designed to protect purchasers and lenders, but they can work harshly against beneficiaries, as seen in Flegg. By contrast, Boland shows how a sole trustee arrangement can preserve beneficiaries’ rights, but at the cost of making the property difficult to sell.
Ultimately, the choice of structure (one trustee vs two) reflects a trade-off:
Two trustees → easier sales and mortgages, but risks sweeping beneficiaries’ rights into money. One trustee → greater protection for beneficiaries, but the property is effectively “locked” until another trustee is appointed.
The law tilts towards protecting the market in land, but there are strategies, like sole trustee ownership, that can be used to reduce the risk of beneficiaries losing their homes, provided the consequences for saleability are understood.
Final Thoughts
The curtain principle and the rules on overreaching can work harshly against families who believe their rights in a home are secure. As the Flegg case showed, even long-standing equitable interests can be swept off the land if there are two trustees, leaving beneficiaries with little protection.
By contrast, Boland demonstrates that where only one trustee holds legal title, overreaching cannot operate, and beneficiaries’ interests can remain tied to the property.
This is not simply an academic debate. These principles matter for real families, especially where parents wish to protect a home for their children or where property is transferred into trust. The law is finely balanced between protecting buyers and lenders on the one hand, and safeguarding family rights on the other.
At Conwy Wills and Trusts, we work with families to structure wills, trusts and property arrangements carefully so that your loved ones’ interests are protected. Whether you’re considering placing property into trust, appointing trustees, or reviewing the security of your estate planning, we can guide you through the practical and legal issues.
To discuss how these principles affect your own situation, call us on 01492 463218 or email us on Katrina@conwywillsandtrusts.co.uk.
We’re here to ensure your property and legacy are safeguarded for future generations.
