How can a Caveat protect your interest?

What is a caveat?

A caveat is a statutory notice that is registered against the Certificate of Title for land. It serves as a notice that the person lodging the caveat (‘the caveator’) has an interest in the land. One purpose of lodging a caveat is to prevent the land from being transferred or otherwise dealt by the owner of the land without the knowledge or consent of the caveator.

When can a caveat be registered?

A caveat can only be lodged by the owner of the land or a person with a “caveatable interest”. The fact that the borrower of money owes someone money will not entitle the lender to lodge a caveat against the borrower’s land. If a caveat has been registered without reasonable cause, the caveator may be liable for loss and expenses caused to any person who suffers loss resulting from the wrongful lodgement of the caveat.
A common example of the use of caveats is where there is an agreement for the sale and purchase of land and buildings which has not yet settled. In that case, the purchaser may lodge a caveat against the title to the property to prevent the vendor from dealing with the land without notifying the caveator.

Common examples of sustainable caveatable interests include the following:

  • Interest of a purchaser where there is an agreement for sale and purchase of land in instances where the purchaser has paid a deposit;
  • Interest of an option holder where there is an option to purchase land;
  • Interest of a mortgagee where there is an agreement to mortgage land;
  • Interest of a beneficiary who has an interest in land under a trust; and
  • Interest of the tenant in leased land.

Some examples of interests that will not sustain a caveat:

  • the interests of a creditor where the registered proprietor owes the creditor money and the debt is unsecured; and
  • an interest as a shareholder in a company that owns land.

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How can a wrongfully lodged caveat be removed?

The easiest way to remove a non-sustainable caveat is to get the caveator to agree to remove the caveat. If the caveator will not remove the caveat, it can be removed by:

  • an application to the High Court to have the caveat removed; and/or
  • an application to the Land Registrar to remove or lapse the caveat

Please note that the above information is intended to provide general information only. The contents contained in this article do not constitute legal advice and should not be relied on as such. For legal advice please contact our professional team at Forest Harrison.