What is a caveat?
In Latin, the word ‘caveat’ means let the person beware. It is a notice to refrain some action pending the decision of a Court and is a warning that action will be taken in certain circumstances, for example, if the owner of a property tries to sell a property with a caveat on title claiming some caveatable interest.
In the context of real property, a caveat is a document recorded in the title of a property and it intends to protect a claimed interest that affects that title. A caveat on a property forbids the registration of any further interests that may affect the interest noted in the caveat unless the caveator (person claiming the interest) consents to the registration.
A caveat is also said to have a secondary function to warn others who wish to deal with the land of the caveatable interest. For example, it would serve as a red flag to potential purchasers or other parties that somebody (the caveator) is claiming some interest in the property.
What is a caveatable interest?
Before you can lodge a caveat, you must have a caveatable interest. Frequently, clients ask “can I lodge a caveat over this person house if he owes me money?”. More often than not, the answer is no, unless by some reason you are entitled to a legal or equitable interest in the land. For example, if you lent somebody money and under the loan agreement, a charge was created which secured the repayment of the money that was lent.
Examples of caveatable interests
Some examples of interests that have been held to support a caveat include:
- the interest of a purchaser under a contract for the sale of land;
- the interest of a transferee under an unregistered transfer;
- a purchaser’s or vendor’s lien;
- the interest of a person arising from contributions made towards the purchase price of a property;
- the interest of a second mortgage;
- the interest of a beneficiary under a trust;
- a claim under an equitable charge;
- the interest arising by reason of financial contributions towards the costs of erecting a granny flat or other form of accommodation.
What happens if I lodge a caveat without a caveatable interest?
If you want to lodge a caveat, you should seek legal advice to ensure that you have a caveatable interest.
Pursuant to section 74P of the Real Property Act 1900 (NSW), a person who without reasonable cause lodges a caveat without having a caveatable interest in the land may be liable for damages to a person who suffers loss or damages as a result of the registration of the caveat.
Challenging and removing a caveat
Generally, there are three ways which a caveat may be removed from your title. These include:
- At your request, the caveator may withdraw the caveat by providing you with a Withdrawal of Caveat in registrable form, which can then be lodged at the NSW Land Registry Services to remove the caveat.
- You may issue a Lapsing Notice (in certain circumstances) and the caveat will lapse within 21 days after serving the notice. Note, a caveator may apply to the Supreme Court after receiving the Lapsing Notice and argue for the caveat to remain until the caveatable interest is determined in Court.
- You may apply to the Supreme Court for the removal of the caveat.
The last two options may involve caveat litigation, and it is not recommended that you take that action without first consulting with a caveat lawyer, or a lawyer experienced with caveat litigation.
Caveat Lawyers Sydney and North Shore
Registering and removing or challenging a caveat is a complex area of law and should not be undertaken without first obtaining legal advice. At Rockliff Snelgrove Lawyers, our caveat lawyers can assist you in the process and advise you on whether you have a caveatable interest before lodging a caveat or the prospects of challenging or removing a caveat. If you are involved in litigation regarding a caveat, our lawyers have decades of experience and can represent you in the Supreme Court to extend or remove the caveat.
For more information or to speak to one of our caveat lawyers, get in touch with our Sydney or North Shore office.