What is a caveat?
Under Section 89 of the Transfer of Land Act 1958, a caveat can prevent the transfer of a land title without the consent of the caveat holder. When a caveat is registered it will appear on a property’s title unless withdrawn by permission of the caveator. When you purchase a property, you may want to lodge a caveat to protect your interest in a property.
If you are about to purchase a property and notice there is already a caveat on the title, this is a flag to investigate why there is a caveat registered, and to ensure the caveat will be removed before your settlement.
Lodging a caveat does not mean the caveator is the new registered owner of the property. It is merely a notice to prevent the property owner from transferring or selling the property without notice or consent from the caveator.
Do I have the right to lodge a caveat?
Yes, if you have a caveatable interest and there are no special conditions forbidding you from lodging a caveat.
There are several potential caveatable interests under the law. The most common interest being an ‘equitable owner of a property’. In other words, a purchaser who has signed a fully executed contract of sale for a home acquires a caveatable interest under the contract of sale.
However, if you are the purchaser of an off-the-plan property there will often be a special condition in place to prevent purchasers from lodging a caveat on the title. This is usually to avoid delays in land subdivision and development. Penalties may be incurred to the purchaser if the condition is breached. When there is a registered caveat on a title, the Land Title Office cannot process the registration for the subdivision unless the caveator provides a letter of consent. Could you imagine the number of consent letters the vendor would need to obtain if every purchaser had lodged a caveat on the property?
Additionally, under the Transfer of Land Act 1958 any person lodging a caveat without a caveatable interest is liable for damages and compensation caused by the caveat lodgement.
Why should I lodge a caveat?
Lodging a caveat on a title can help prevent a seller from selling the property to another purchaser before settlement. It can also decrease the risk of a third party interfering with a property transaction. For example, a creditor lodging a caveat before you will take priority over you as the purchaser.
When a purchaser’s caveat is lodged, this can also minimise the risk of delaying settlement, as a delayed settlement would incur additional costs.
How do I lodge a caveat?
Contact Wealthsource Legal and we can help lodge the caveat for you, and answer any question regarding your next property transaction.