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What is a Caveat?

27 Jan 2022

1 min read

27 Jan 2022

We Explain What Caveats Are & How They Can Be Used & Removed.

A caveat is a legal notice made to the Registrar of Titles. It records a person’s interest in a property that is not otherwise reflected in the title of the land. In other words, the ‘caveator’ lodges a claim against the property of another to be included in the decisions made for that property.

Our property lawyers explain in this article what a caveat is; how it is used and how to get a caveat removed if needed.

When is a caveat used?

A person or entity must have a caveatable interest in order to register a caveat on a title of a property. It is important to note that if you do not have a caveatable interest, your caveat can be expunged (removed).

Caveats are often used in the following situations:

  • Purchasers when a Contract of Sale has been signed
  • In Family Law matters, for example when only one party is registered on tile
  • Estate Disputes, for example when there are multiple beneficiaries
  • Lenders and some debtors
  • To provide security in business transactions
  • To secure a party’s interest in a property, for example when a party has contributed to a property but is not registered on title

You will either be granted an interest in writing by agreement with the registered owner or you may have an interest in equity which means that you have some other grounds of ownership in the property.

When is a Caveat used in Family Law?

In the context of family law, a caveat is usually lodged when there is a separation in a de facto relationship or marriage. A caveat protects your interest in a property where you have contributed to its upkeep both financially and non-financially. This means that the registered owner cannot sell, refinance or utilise the property without their knowledge.

However, just by being in a de facto relationship or marriage does not automatically entitle a person to lodge a caveat over a property. A claim under theFamily Law Act 1975 does not itself give rise to a caveatable interest. It’s best to seek legal advice to find out if you are able to lodge a caveat.

A claim for an interest in a property may be made if you have made financial contributions towards the mortgage or for expenses on the property, for example in the form of renovations or maintenance. It is important that you have evidence of making payments or contributing to the property, it supports your claim.

In some cases, as party of the asset pool, an interest can arise when non-financial contributions have been made, such as the providing childcare and general upkeep of the property.

It is strongly recommended you seek out legal advice from a family lawyer as there are risks associated with lodging a caveat improperly.

Buying a house

Property purchasers have an automatic interest in a property and can lodge a caveat (providing they are the purchasers named in the contract). The caveat will then be withdrawn at settlement.

Caveats protect purchasers in a variety of ways. This is especially so with paper settlements. If there is a registration gap (the time between settlement day and being registered on title) you may be exposed to title fraud or someone else lodging a caveat or mortgage. The caveat acts as an alert and restriction for anyone trying to deal with the title or property.

What are the risks?

It should be noted that different states and territories have different legislations where the number of days for active caveats may differ.

You cannot lodge a caveat if you feel you have been ‘wronged’ or are simply owed money by the registered owner. If you lodge a caveat and are deemed not to have an interest in the property, you may be liable for any financial loss suffered by the owner during the caveat period. An owner has the right to seek damages against a person who has lodged a caveat “without reasonable cause”. The registered owner can also initiate legal proceedings against you, sometimes without much notice.

How to Remove a Caveat

If a caveat has been lodged on your property and you want it removed, we can assist. Our property litigation department are skilled at assessing options for withdrawing caveats.

If a caveat has been lodged without a proper basis, it may impact your ability to obtain finance and transact with your property as you wish. A caveat can be a red flag to lenders, prospective purchaser and can be problematic for clients wishing to otherwise deal with their properties.

A withdrawal of a caveat can occur in a number of ways:

  • The person who lodged the caveat can remove it
  • The caveat can be removed by an order of the Supreme Court
  • The caveat can automatically lapse under a lapsing notice issued by another party
  • The caveat can be cancelled by the Registrar of the Land Titles Office

The cost of removing a caveat can vary depending on the relationship between the relevant parties. Our lawyers are skilful at defining your legal position and negotiating to have a caveat withdrawn or retained.

If you require legal advice on the lodgement or withdrawal of a caveat or other related matters, we atPCL Lawyers canhelp. Our property lawyers in Melbourne and Sydney are experts at providing you with advice on caveats. Whatever the case, you want to be sure that you have experienced and knowledgeable property lawyers in your corner – which is exactly what you get with our firm.

Speak to a property lawyer here, or call us on 1300 907 335.

Disclaimer: This article has been prepared for general information purposes and may not apply to your situation. This information should not be relied upon for legal, tax or accounting advice. Your individual circumstances will alter any legal advice given. The views expressed may not reflect the opinions, views or values of PCL Lawyers and belong solely to the author of the content. © PCL Lawyers Pty Ltd.

If you require legal advice specific to your situation please speak to one of our team members today.

About The Author - Glenn Duker

Glenn Duker is Managing Partner, and founder, of PCL Lawyers. Glenn has a Bachelor of Laws / Arts from the University of Melbourne and was admitted to practice more than 25 years ago. He has...

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