What is a Caveat and why are they important?
Caveats are a powerful tool in protecting the legal or equitable interests of an individual or entity in real property.
What is a Caveat?
A caveat is a document that is lodged with the Land Titles Office, a division of the Department of Natural Resources, Mines and Energy, that prevents any person, including a registered proprietor, from dealing with real property.
A caveat prevents a person from selling or otherwise transferring ownership of real property and also prevents the registration of new instruments such as mortgages on the title. There are several prerequisites to enable the registration of a caveat and there are serious consequences for improperly registering a caveat.
What is a Caveatable Interest?
A caveatable interest means a legal or equitable interest in real property. The following are some common examples of caveatable interests:
- purchasers of a property may have an equitable, and caveatable, interest in that property, subject to the completion of the contract of sale;
- a person or entity who contributes financially to the purchase of a property, but does not appear on the title to the property, may have a caveatable interest;
- agreements for the sale of goods or services which contain a “charging clause”. Subject to the terms of the agreement and upon execution, a charge may be created over real property. This may permit the seller of the goods or services to register a caveat over the purchaser’s real property in the event the purchaser fails to make payment under the agreement; and
- a beneficial interest under a trust is also a caveatable interest. This type of interest occurs where the legal owner of a property holds said property as trustee for the benefit of the beneficiary.
How long do Caveats last?
In Queensland, a caveat will lapse after a period of three months unless, thecaveator, the person filing the caveat, files proceedings in a court that has jurisdiction to determine the interest specified in the caveat.
The above period may be shortened if the caveatee, that is the person who is subject to the caveat, files and serves upon the caveator a Notice requiring the caveator to commence proceedings in a court of competent jurisdiction. After this occurs, the caveatee must deposit an instrument notifying the Registrar of the Notice within 14 days of service upon the caveator. Within 14 days of being served, the caveator must commence court proceedings or otherwise risk the caveat lapsing.
These timeframes are not uniform across Australia. For example, in Victoria, a caveat may lapse after 30 days of being lodged unless, within that time, the caveator has notified the Registrar, in writing of proceedings commenced in court to substantiate the claim of the caveator. If you have any doubts about time frames or any other matters in relation to caveats you should seek legal advice.
If a caveat has lapsed, another cannot be lodged on the same or substantially similar grounds without the consent of the court. In Queensland, a caveatee may apply to the Supreme Court of Queensland for an order that the caveat be removed.
What is a Non-lapsing Caveat?
There are some limited circumstances in which caveats do not lapse. For example, if a caveat is lodged with the consent of the registered proprietor then this will create a non-lapsing caveat. In Queensland, the consent of the registered proprietor, in the approved Form 18, must be deposited with the caveat and not at some later date for the consent to be effective. However, it is important to note that owner consent does not permit a person without an interest in the land to lodge a caveat.
Can I be liable if I improperly register a Caveat?
If a caveat is lodged against a property improperly there can be serious consequences that result. A caveat prevents a person, including a registered proprietor from dealing with real property which may cause significant harm. Consequently, a caveator may be liable to compensate anyone who suffers loss or damage as a result. For example, if you improperly lodge a caveat over land that is subject to a contract of sale and in doing so prevent that sale from proceeding, you may be liable to compensate the seller of property for the loss they have incurred in being unable to proceed with the sale.
At Moore Lawyers we are adept at using a caveat to protect our client’s interest in land but are also able to act on your behalf to remove a caveat improperly registered against your land. There are many pitfalls associated with the lodgement (and subsequent enforcement) of a caveat and you should seek our advice to avoid any adverse outcomes or to protect your rights.
If you need advice to ensure that your rights are properly protected, contact our experienced litigation and property team on (07) 3186 8669 or click here to Book a Consultation now.