Beware the Caveat!

Do you know what a caveat is when it comes to property?

You may have heard the expression “Caveat Emptor” meaning buyer beware.

The Latin word, “Caveat”, means “beware” and that’s exactly what it means when there is a a Caveat registered on a property.

While the Land Title Act is slightly different in each State, all States have legislation with similar effects.

What is a caveat?  

A Caveat is a document which is lodged at the relevant Land Titles Department by a party who claims an interest in land.

A Caveat is a type of statutory injunction preventing the registration of particular dealings with real property and acts as a warning or formal notice to tell the public that there is an interest on the land or property for a particular reason.

The party claiming the interest lodges the caveat to protect their interest.

In effect, the Caveat will jump the queue of all other matters which are awaiting registration.

What are the effects of a caveat?

The registration of a Caveat will effectively prevent any dealing with a parcel of land until the competing interests have been resolved either by mutual agreement or by the courts.

under Section 126 LTA is politely known as the “put up or shut up” Notice.

What are the contents of a caveat document?

Due to the serious effect which it will have once registered on the Title, the Caveat document must include a clear description of the land which is affected and a clear description of the interest claimed. 

In NSW, when completing a caveat for lodgment, you are required to include the following information:

• Caveator’s name and residential address/registered office including an address where notices can be served;
• Name and address of the registered proprietor
• Reference details for which the caveat relates;
• Particulars of the legal or equitable estate of interest;
• A verified statutory declaration; and
• The signature of the caveator, solicitor or another agent of the caveator.

It is not the role of the Registrar of Titles to decide if the interest claimed in sufficient to support the Caveat.

This matter must be decided by the Courts if required.

Who would lodge a caveat?

In general, a party will lodge a Caveat if it has an interest in land and it is of the belief that the land may be sold, mortgaged or otherwise dealt with in a way which would be detrimental to their interests.

This could include:  

1. Unregistered Mortgagees

Normally id you lend money using a property as security, you would take out a registered mortgage.

However, often in family situations, this does not always occur.

2. Parties To A Property Dispute

Often parties in a business or personal relationship purchase real property in the name of one party or the other.

As a result of a dispute, one of the parties may attempt to deal with the land without the consent of the other.

Then he party who is not the registered proprietor will often lodge a Caveat to protect their interest in the land until the competing interests have been determined satisfactorily.

3. Purchasers Under prolonged Contract of Sale 

While soliciotrs may recommend you lodge a caveat any time you purchase a property, this is particularly important if there is a long settlement period.

What Happens if I Incorrectly Lodge a Caveat Without a Caveatable Interest?

Only a person who has a caveatable interest is entitled to lodge a caveat or to instruct their lawyer to lodge a caveat on their behalf.

Lodging a caveat without reasonable cause is a serious matter, and you may be liable to compensate any person who suffers a resulting pecuniary loss.

The Bottom Line

A Caveat is a form of “insurance” for parties with a genuine interest in a property to prevent that property being dealt with against their wishes.”