What is a caveat?
A caveat is a statutory injunction which notifies others of your interest in a piece of land. A good way to look at it is to see it as a warning which alerts others that someone else has an interest in the land. Lodging a caveat will prevent any transactions taking place, unless an exemption applies.
A person normally lodges a caveat (the caveator) in the following situations:
- To protect a lease or mortgage
- Where a lender wants to secure a home loan
- To protect a purchaser’s interest under a contract for sale
- To delay the sale of land
- Where someone has an equitable interest in the land
Your caveat will appear on title searches of the land, however it will only appear on the certificate of title if you specifically request for it to. 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. It’s important to consult a lawyer as a caveat can be rejected for a number of reasons. This includes if the details aren’t correct or if you fail to state your interest in the land.
Equitable interests
Caveats are often lodged where a person has an equitable, but not a legal interest in land. This title is not “true ownership”, and ordinarily, this type of interest can be overridden by legal ownership. The only way an equitable interest can be enforced is by the Court. If you lodge a caveat, it will prevent any dealings from occurring until it has been determined by the Court.
How do you lodge a caveat?
In NSW, you lodge a caveat through the Land Registry Services. However, every state and territory in Australia has a differing office for registering caveats. However, this can be a complex process and a mistake can result in losing a property so it’s important to use a property lawyer.
How does a caveat lapse?
1. Application by the registered proprietor
You can object to a caveat by issuing a lapsing notice. A lapsing notice (normally sent by someone with legal title to the land), informs the caveator that their claim is due to lapse. The caveator then has 21 days to apply to the Supreme Court for it to be extended. A person with legal interest in the land can also apply directly to the Court if the caveat was lodged ‘without reasonable care’.
2. Withdrawal
A caveator can withdraw their caveat by lodging a form 08WX. This form must be signed by you or your lawyer and be lodged by hand.
Do I need to lodge 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:
- Removing it through lodging a withdrawal
- Providing your written consent to the registration of the dealing
- By the other party serving a lapsing notice, which would lapse and remove your caveat automatically within 21 days if the caveator does not apply to the Supreme Court to obtain an extension for their caveat
- A party obtaining an order of the Court to remove the caveat
Conclusion
If you have recently exchanged contracts, or have an interest in land, it is important to know your rights so that you can protect your interest. If you are in a situation where your interest could be at risk, it is important to seek advice from a property lawyer.
