Find out how to lodge a caveat, why you may need one and the benefits and protection it can provide. When you want to secure your interest in a property and prevent anyone else from dealing with it, you may want to consider lodging a caveat as an additional layer of protection. A commercial lawyer can help by doing all the necessary checks to make sure you have a caveatable interest. Let’s take a closer look.
What Is A Caveat?The Real Property Act 1900 provides a statutory injunction that prevents plans or registrations on a title in NSW. It is a notification or warning to others that a person has an interest in the real property. Caveat means “beware”, and lodging a caveat on a prospective property warns anyone with a similar claim that someone else has priority. It effectively acts as a “freeze” on the property, prevents anyone else from dealing with that property, and protects the purchaser’s interests between the sale and settlement. The person who lodged a caveat on a title is called the “caveator”.
Benefits Of Lodging A Caveat
- A caveat can offer you an additional layer of protection against fraud, as it prevents future lodgements on the title by other interested parties.
- As a property buyer with a long settlement, it offers increased protection, as it makes a record of their interest even before the title is transferred into their name.
- A caveat is more secure than a priority notice as it remains on the Community title until it is formally withdrawn or removed by a court order.
- It can provide extra time for parties to apply to court.
Uses Of CaveatThere are several ways to use a caveat:
- If not already protected by a mortgage, it prevents any other registration of incoming interest by other prospective buyers on unencumbered NSW land.
- When a house or land is under a contract for sale, it can protect the purchaser.
- It can register plans for demolition.
- Lenders or banks may lodge a caveat to secure a loan and create awareness of their financial interest.
How To Lodge A Caveat?Before lodging a caveat, seek legal advice from a lawyer who specialises in commercial law. When you prepare the caveat document, a solicitor or conveyancer can help. It can be lodged electronically or downloaded and completed as a hard copy. The form is then submitted either electronically or in person at the land registry service (LRS), and there is a fee that you will need to pay. The LRS examines the documentation, as well as any other supporting information. The register is only updated if the lodgement meets the requirements, and the caveat can then be lodged formally. Once it is processed, the caveat is recorded against the land title on their register. The applicant, and the title’s registered proprietor, if they are not the caveator. receive a confirmation notice from LRS. Ensure that you have a caveatable interest in the property before you take steps to lodge. Otherwise, if you have submitted a caveat without reasonable cause, you may be liable to pay compensation.
What Details Need To Be In A Caveat?The information that is required to lodge a caveat will differ from state to state. Public In NSW, for example, you need to include:
- Caveator’s name and address
- Name and address of registered proprietor
- Caveatable interest
- Grounds for the interest
- Reference details
- Verified Statutory Declaration
- Signature of the caveator, lawyer or agent
What Is An Interest?Interest could be an equitable mortgage, estate or a right concerning the land title. Only those with an eligible interest can submit a caveat.
What Are Grounds for Interest?When you lodge your caveat, you need to show that you have the legal grounds to claim interest over the property, for example, a long settlement or an equitable mortgage due to a broken down relationship.
How To Remove A Caveat On A Property Title?Before getting caveats removed, you should seek legal advice, as the process can vary from state to state. There are several ways to remove the caveat, depending on the circumstances.
- Supreme Court order
- The caveat lapses
- By consent of the caveator