Blog

Understanding Caveats

Caveats can be applied to properties of all kinds and they affect dealings with the property and how the property is used. While not affecting the ownership of a property, the caveat system allows third parties to be informed of your interest in the land, hence protecting your interest in it. At Robert Wood and Associates, we are expert property settlement lawyers and can help with a diverse range of property law solutions. If you have interest in a property, here are some things you should know about caveats.

What is a Caveat?

A caveat is a document that any person with a legal interest in a property (but for the registered owner of the property) can lodge at the Land Title Office. It claims an “estate or interest” in the property and prevents the owner from dealing with the land without the consent of the person who registered the caveat (the caveator). After lodging, a note appears on the title giving anyone searching the title notice that a third party claims rights over the property and prevents further dealings on the property’s title until the caveat is either formally withdrawn, lapses or is removed by a court order.

Who Can Lodge a Caveat?

Any individual or body corporate can lodge a caveat over a specific property, however, in order to be able to lodge one, it is essential that you have a caveatable interest.

Examples of Caveatable Interest Includes:

• An equitable owner of a property
• A life tenant
• An interest as mortgagee (a lender)
• An interest under an option to purchase
• A purchaser under a contract for sale
• The beneficiary of a unit trust
• A party that performs works or contributes towards a property with the view to taking some form of ownership of the property
• A lessee under a lease

The most common caveatable interest is an interest pursuant to a Contract of Sale. Here, a caveat is registered on the title to give notice to all persons searching the title that a person other than the registered owner has an interest in the property and to ensure that no further transaction occurs in relation to the property prior to the settlement date.

Some Examples Deemed by The Court to Be Non-Caveatable Interests Include:

• Debts without an agreement which allows the lender to have a charge on the land
• A purchaser with only an oral agreement
• Lender claiming costs when the loan did not actually proceed
• A shareholder in a land-owning corporation

Wrongful Lodgement

Lodging a caveat without reasonable cause is a serious matter and you may be ordered by the Court to compensate any person who suffers a financial loss as a result of your incorrect caveat. A solicitor who lodges a caveat knowing that there is no legitimate basis for it, will be guilty of professional misconduct and may be personally liable for damages.

Challenging or Removing Caveats

If the caveator agrees to the removal of their caveat, a Withdrawal of Caveat form must be lodged and registered at the Land Titles Office. Section 89A of the Transfer of Land Act 1958 (Vic) provides a mechanism for the removal of a caveat if the caveator refuses to withdraw their caveat or cannot be located. An application is made to the Registrar of Titles and is accompanied by documentation form a solicitor that supports the claim that the caveator no longer has the interest in the property. A notice will be sent to the caveator notifying them of the application and give them a specified period to either issue proceedings or the caveat will be withdrawn. If the caveator will not allow withdrawal, an application can be made to the Supreme Court for its removal.

Lodging a caveat allows you to protect your interest in a property, but before proceeding, it’s important to take steps to ensure you have a caveatable interest and seek professional legal advice to ensure you don’t get it wrong.

For further information on caveats or for any other property law advice, please get in touch with the team of expert property settlement lawyers at Robert Wood and Associates today online or call us on (03) 9762 3877.