If you have exchanged contracts, your unregistered interest may be at risk until it is registered after settlement. It is important to know what these risks are, and how they can be minimised. It is recommended to seek advice from a property lawyer.
What rights does a contract for sale give me?
Once a contract for the sale of land is signed by both parties, and each party receives the other party’s signed contract, exchange has taken place. At this stage, the purchaser is not entitled to a registered interest in the land and possesses merely an unregistered interest. The contract is a written agreement to convey the land for a set price and by a certain date. This does not necessarily prevent the registration of interests such as new mortgages, leases or a further sale to a new party.
What is a caveat?
A caveat is a statutory injunction which notifies other parties of your interest in the land. For example, if the title of the land in question is observed, a caveat will appear on there to notify of your unregistered interest, such as your exchanged contract for the sale of the land. The effect of this is that it will prevent the registration of any other dealings in conflict with your interest. It does so not only by notifying other parties of your interest but by also directing the Registrar General not to register any dealings inconsistent with the interest you claim.
Do I need to place a caveat after exchange of contracts?
Until you are in a position to register your interest, which is usually after settlement once you obtain and register a transfer, a caveat should be registered to protect your unregistered interest. This could protect you from any new mortgages entered into before settlement by notifying lenders of your interest, or if a dishonest vendor attempts to sell the property to someone else, directing the Registrar General not to register the dealing.
Ways in which a dealing could be registered once you have registered a caveat includes:
- By you removing your caveat through lodging a withdrawal of caveat
- By providing your written consent to the registration of the dealing
- By the other party claiming an interest which is being attempted to be registered serving a lapsing notice, which would lapse and remove your caveat automatically within 21 days if you do not apply to the Supreme Court to obtain an extension for your caveat
- A party obtaining an order of the Court to remove the caveat
If you have recently exchanged contracts or plan to exchange contract for the purchase of land it is important to know your rights so that you can protect your interest.
If you are in a situation where this could be you and your interest could be at risk, it is important to seek advice from a property lawyer.
Need assistance to ascertain your rights regarding your purchase of property? Do you need help with protecting your interest in land after? Contact a LawPath consultant on 1800 LAWPATH to learn more about customising legal documents, obtaining a fixed-fee quote from our network of 600+ expert lawyers or to get answers to your legal questions.