- What are property caveats?
- What does a caveat on a property mean?
- Why get a property caveat?
- Who can lodge a caveat?
A caveat on a house or title operates as a warning on a land title to others by noting a person or organisation’s interest in land or property. Only those with an eligible interest in the land can record a caveat on the title.
What does a caveat on a property mean?
A caveat is a form of statutory injunction provided for under the Real Property Act 1900. It acts as a warning or notice to the public that there is an interest on the land/property for a particular reason, and it can therefore not be sold to another purchaser unless the caveat is lifted.
Why get a property caveat?
The most common reason a caveat on property is lodged is when contracts have been exchanged on property but the property has not yet been settled. The purchaser acquires what is known as a “caveatable interest”. This means that the purchaser is entitled to register a caveat to protect that interest.
Some of the benefits of caveats include:
- Caveats on the title provide long term protection as they remain on the title until it lapses, is removed by court order, is formally withdrawn, or when the interest in the caveat is satisfied by the registration of a subsequent dealing or plan.
- Caveats can provide an additional layer of fraud prevention by preventing lodgements on the title by other parties for unencumbered land.
- Increasing protection for people buying property during long settlements through recording their interest in the property on the title before it is transferred to them.
Who can lodge a caveat?
Apart from purchasers, other people who can lodge a caveat on a house or title are buyers who have signed a contract to buy the same property. This can happen by mistake if two real estate agents sell the property to different purchasers. In this instance, the person who lodges the caveat first may have a principal claim to the estate.
A bank lender may also lodge a caveat on a purchaser’s behalf to prevent the vendor from selling the property. A creditor may have a written agreement with the vendor that allows the creditor to lodge a caveat to secure a loan. Alternatively, the creditor may have a court order allowing for the lodging of a caveat.
Please note: if you lodge a caveat without reasonable cause, you are liable to pay compensation to any person who suffers a financial loss as a result. This is why it’s best to speak to an experienced property lawyer about lodging a caveat on property.
Caveat Lawyers
Frequently Asked Questions
1. Withdrawal
A caveat can be withdrawn by lodging a Withdrawal of form signed by the caveator or their solicitor with NSW LRS, or by an order of the Supreme Court annexed to a Request form lodged with NSW LRS.
2. Order of Court
The Supreme Court can make a ruling to extend or remove a caveat as it deems appropriate. After a judgement is made regarding a caveat, NSW LRS will then take action to extend, withdraw or remove the caveat in accordance with the Orders of Court at the direction of the lodging party.
3. The caveat lapses
A caveat lapses when the interest claimed under the caveat is satisfied by the registration of another dealing; or
an Application for Preparation of Lapsing Notice form, is lodged with NSW LRS by the registered proprietor of the land or a registered interest.
4. Obtaining the caveator’s consent
A caveator may opt not to remove their caveat but might not oppose the lodging and registering of a transaction or plan. For instance, if a caveator asserts a claim as an unregistered mortgagee, they may not oppose the granting of a lease on the property. In such scenarios, the caveator can provide written consent to facilitate the registration of the subsequent transaction.
By consenting to the registration of a transaction, the caveator also agrees to the exercise of any associated rights that the owner of that interest may acquire through registration. For example, if a caveator consents to the registration of a mortgage, the caveat will not hinder the mortgagee from exercising the power of sale outlined in the mortgage.
Caveats appear on the certificate of title under the second schedule that deals with registered encumbrances and interests.
Owen Hodge Conveyancers are able to help you with all of your property and conveyancing questions regarding caveats on a house
and on the title.