Australia: What is a caveat?

What is a caveat and why is it important in property law matters in Australia? A caveat is a form of statutory injunction that restricts other people from taking interest in a place or property.

People who plan to lodge this legal notice should have a caveatable interest in the concerned property. A person needs a legal or equitable interest in a land in order to have this type of interest. Some of these interests include a:

• Legal document such as a recorded mortgage;
• Transfer;
• Purchaser seeking property settlement under a sales contract;
• Tenant (under certain conditions);
• Registered proprietor; and
• Contractual rights.

Property disputes usually involve parties who are fighting whether a caveat is legal or not. Here's a common scenario involving a caveat. For instance, George signed a sale contract for a new property. However, he was advised to lodge a caveat on the property since he has an interest in it.

This ensures that no one can buy the property and also prevents vendors from selling the property to someone else. A caveat can be lodged with the Land Titles Office, or alternatively with the relevant Registrar of Titles of the state or territory which the property is in.

A caveat is valid until it is removed, expired, or cancelled. It's also important to note that not everyone can lodge a caveat. The implications of filing a caveat without a caveatable interest are extremely serious. Parties may be subject to orders for the payment of fees related to the caveat, and the caveat will be withdrawn from the Register. Read on to know more about what is a caveat.

What Is a Caveat: Relevant Acts

The Importance of a Caveatable Interest

What is a caveat and how do you lodge one? As mentioned, a person needs to have a caveatable interest in order to lodge a caveat. Being a party to a de facto relationship or marriage, or having the right to file a family law claim, does not automatically give a caveatable interest to a party. However, the following may result in an interest:

• Certain non-financial contributions (Unpaid property or house maintenance)
• Monetary contributions made towards the down payment (Property improvements)
• Repairs on the property

Note: People who want to lodge a caveat without having interest in the property may be liable to pay compensation.

How Do You Lodge a Caveat in NSW?

Lodging a caveat in NSW will require:

• The caveator's (the person lodging the caveat) name, residential or business address, and the mailing address for formal notice purposes
• The registered owner's name and address. A title search is needed to ensure that this information is credible
• Reference details for which the caveat applies
• Specifics of the interest's legal or equitable estate
• The signature of the caveator, their attorney, or another representative/agent

What is a caveat and how do you lodge one in NSW? Here are the steps.

1. Although not mandatory, it is highly advisable to seek a conveyancing solicitor to fill out necessary caveat forms and relevant exception form.
2. Ensure all fees are paid and electronically file the caveat to the NSW Land Registry Services (NSW LRS)
3. NSW LRS reviews the supplied paperwork. The estate or interest claimed must be described in detail. Additionally, specifics of any instrument and/or evidence supporting the claim must be provided.
4. If the caveat satisfies the standards for lodgement, the Register is modified to reflect its lodgement. The caveat is entered against the title in the Register once it has been processed.
5. NSW LRS notifies the applicant of the caveat and notifies the registered proprietor if they are not the caveator.

What is a Caveat: Challenging or Removing Caveats

There are a number of ways for challenging or removing a caveat. One way to remove a caveat is the issuance of a lapsing notice by the legal owner.

Another way includes the submission of a "withdrawal of the caveat form" by the caveator. Furthermore, a caveat may be lifted with the caveator's written consent when a new dealing or plan is registered in some states. What is a caveat and how do you remove one in NSW? Here are four ways:

1. Formal Withdrawal

The caveator must:

1. Withdraw the caveat
2. Sign and complete a withdrawal of caveat form (Form 08WX from the Land and Property Information Office)
3. Lodge the withdrawal fee

Note: Again, it's important to seek legal advice when formally withdrawing a caveat.

2. Lapsing

This may occur when:

• The caveator's interest is fulfilled because another party registered a different transaction. For instance, if the caveator is an unregistered mortgagee, the discharge of the mortgage will satisfy his/her interest in the property,
• The registered owner or a person with a registered interest submits the application for the creation of a lapsing notice,
• A party submits an application for the creation of a lapsing notice along with a transaction that the caveat prohibits.

3. Court Order

The Supreme Court has the authority to decide whether to add or remove a caveat. Following a caveat decision, NSW LRS will act on the lodging party's instructions to extend, withdraw, or delete the caveat in compliance with court orders.

4. Obtaining the Caveator's Consent

Although a caveator might not want their caveat lifted, they might not object if an agreement or plan is filed and registered. For instance, a caveator asserting that they are an unregistered mortgagee may not object to the property being leased. In these circumstances, the caveator may consent in writing to the following dealing's registration.

Why Is It Important To Seek Legal Advice?

This article has discussed what is a caveat and how to lodge and remove one in NSW. Legal disputes may arise when it comes to caveats on a property sale. For instance, a person may contest that the caveator had no caveatable interest in a land in the first place. When it comes to property law matters, it's important to seek legal advice from the best conveyancing solicitors.

We at JB Solicitors also cater to property law matters and help protect our client's interests. Our team of conveyancing solicitors can further explain the legal implications of property law matters. We can also determine whether our clients are eligible to lodge a caveat or remove one legally. Our fixed fees can help clients know how much they will pay for our property and family law matters.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.