Your Guide to Caveats
The first time most of us hear about a caveat is when we’re buying a property, and the conveyancer asks if “you want to lodge a caveat?”. If you’re unsure of how you’re supposed to answer, we’ll help clarify things in this article.
Simply put, a caveat is a legal notice registered on the title to the property, which protects your interest in the property on which you lodged the caveat. This gives you, the caveator, a ‘priority interest’ in the property which prevents third parties or the registered proprietor from dealing with the property without your knowledge.
While this might sound great to some however, not anyone can apply for a caveat.
The most common type of caveat is the purchaser’s caveat. When a purchaser buys a property, the purchaser’s caveat essentially notifies others that the purchaser has entered into a contract of sale to buy the property. This restricts the title being dealt with any further, thus protecting the purchaser’s interest in the land. A purchaser’s caveat automatically lapses when the purchaser becomes the registered proprietor on the title.
To register a caveat on the title of a property, you need to have a caveatable interest first.
There are a variety of different scenarios in which you might have a caveatable interest, for example:
Because every situation is unique, you should discuss your circumstances with your conveyancer or lawyer to determine if you have a caveatable interest. In some instances, there are special conditions in the contract of sale of property that prohibit you from being able to lodge a caveat. This is common when you are purchasing a property off-the-plan.
In summary, your caveatable interest will arise in one of two ways:
This is a question you’ll want to talk through with your conveyancer or lawyer. In terms of some general benefits, caveats can deter the registered proprietor or potential third parties such as the mortgagee, from proceeding with their dealings by warning them of your claim.
Additionally, it alerts you of any third-party dealings on the title so that you have the chance to oppose them. This is especially important where you have deposit monies at risk or you release the deposit under Section 27 of the Sale of Land Act 1962 (VIC).
This is especially handy in paper settlements where there is often a registration gap that can leave you open to title fraud or another party registering a caveat. If this were to occur, you could be in a situation where settlement has occurred and you are unable to become the registered owner of the property.
It is also helpful in high-risk property settlement or where a dispute may have occurred. I notifies lenders or other parties that the property is under contract.
That said, there are some risks that you’ll want to consider and talk through with your conveyancer or lawyer.
Feeling ‘wronged’ or ‘owed’ something by the owner does not give you a caveatble interest and therefore the right to lodge a caveat on the title to the owner’s property. Lodging a caveat incorrectly can leave you liable for damages and legal proceedings.
Also, keep in mind, each state and territory has different laws surrounding caveats (in Victoria, it’s the Sale Of Land Act 1962 (VIC), so make sure to clarify this with your conveyancer or lawyer.
On the flip side, if a caveat has been lodged on your property you might find that your ability to finance and transact with your property has been negatively impacted. Caveats are, after all, Latin for ‘warning’ and often look like a red flag to potential buyers and lenders.
Notably, caveats can be removed. There are a few different options for caveat removal that our property lawyers can discuss with you. These include:
Our conveyancing lawyers at Conveyancing Depot will be able to help you find the best option for your situation. We can help advise you on your property rights.
Contact one of our conveyancing experts to discuss your matter on 1300 900 440 or use our online form.
We help clients with residential and commercial property transactions.
A registration gap mainly occurs in paper settlements. After a paper settlement occurs and monies are paid, the title is still in the name of the Vendor or Seller. There is a period of time before the title is transferred into the purchaser’s name. This time period is called a registration gap. There is a risk during this time that someone lodges a caveat or deals with the title and prevents the purchaser from registering the property in their name.
A caveat is a protective measure to prevent this from occurring when lodged after the purchase of the property but before settlement. It is similar to an insurance policy to ensure your interest in the property as a purchaser is protected and you become the registered proprietor. Today, most settlement are electronic. However they can still be done “on paper” if the system has an outage, which does occur.
Disclaimer: This article has been prepared for general information purposes and may not apply to your situation. This information should not be relied upon for legal, tax or accounting advice. Your individual circumstances will alter any legal advice given. The views expressed may not reflect the opinions, views or values of Conveyancing Depot and belong solely to the author of the content. © Conveyancing Depot Pty Ltd.
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Glenn is the founder of Conveyancing Depot and the Managing Partner. He has extensive experience...