To Caveat … Or Not to Caveat?

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Caveat

BEFORE EVEN beginning to answer this question, you first need to understand what a Caveat involves.

A Caveat is a document, which any person with a legal interest in a Property is able to lodge with the land registry (or titles office).

After registration, a caveat note appears on the Title giving prospective purchasers or financiers notice that a third party might have rights over the property.

The process of preparing, lodging and having a caveat registered with the land registry is quite straight forward. Accordingly, caveats are commonly lodged over properties without obtaining legal advice.

Make sure you are Entitled to Lodge

Most land registries around the county accept the lodgement of a caveat — if the caveat form has been completed properly — without making enquiries as to whether the caveator actually has a legal “caveatable” interest.

Therefore, if you intend lodging a caveat, you must give serious consideration as to whether you are actually entitled to lodge that caveat.

Failure to do so will result in an invalid caveat — which will not protect the interest you intended. But more importantly, may well expose you to a significant compensation claim.

Prior to lodging a caveat, consideration needs to be given as to whether you (as the caveator) have a caveatable interest. Some accepted interests include:

  • A purchaser under a contract to purchase the property;
  • A tenant under a lease over the property;
  • A legitimate charge over the property;
  • An unregistered mortgagee; and
  • A party benefited by an easement (or restrictive covenant) in relation to the property.

However, there are some interests determined by the courts, which do NOT allow you to create a caveatable interest. And these include:

  • An unpaid debt (unless a charge has been granted);
  • A builder under a construction contract (unless a charge has been granted);
  • An unsecured claim for a debt or for damages; and
  • A holder of a license in relation to the Property.

Further considerations

In addition to ensuring that the correct caveatable interest is noted on the caveat, there are other factors you need to consider … including:

  1. Ensuring that the estate or interest being claimed is described correctly;
  2. Ensuring that the address for notice is current (and updated as required); and
  3. Ensuring that the correct type of caveat is used.

Bottom Line: Failure to give careful consideration to the above may result in a court declaring your caveat invalid AND ordering you (the caveator) to pay damages.

Accordingly, it is strongly recommended that you seek advice from a legal practitioner whenever you’re planning to lodge a caveat over any property.

Xenos

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