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SEPTEMBER 2014

Caveats

What they are and how they work?

A caveat is a notice which is registered against the title of a property which alerts anyone who obtains a search of that property’s title that a third party (other than a Bank) is claiming a right or interest in that land.

A caveat prevents the owner of the land from dealing with the Certificate of Title for the land (ie. selling or mortgaging the land) until the caveator (person who has lodged the caveat) has had their claim resolved.

This is the same for a notice of claim of interest under the Property (Relationships) Act 1976 which is similar to a caveat in that it prevents an owner spouse from dealing with the land until any relationship property issues have been resolved.

A caveat can be lodged to protect interests such as:

  • A purchaser paying a large deposit on a property particularly when the settlement date might be some time away;
  • A purchaser’s interest under an option to purchase agreement;
  • A beneficiary’s interest under a trust who is entitled to an interest in land;
  • A lender where there is an agreement to mortgage the land.

However, a caveat cannot be registered on a title simply because the land owner owes someone money. A caveat can only be lodged by someone who has the legal right to caveat and those rights are contained in the provisions of the Land Transfer Act 1952. A caveat can only be lodged against the title to a property by a person who claims to be entitled to or beneficially interested in the land.

However, if a caveat is registered without reasonable cause, the person who lodged the caveat may have to compensate the owner of the land who has sustained damage or losses as a result of the caveat being lodged.

If you believe you have a caveatable interest in a property where you would like to protect that interest or a caveat has been registered against your land, then please contact us to discuss.