Caveat is a Latin word loosely meaning “warning”. They are formal notices or warnings recorded on title indicating that someone (called the Caveator) holds a legal or equitable interest in a property. Caveats act as a “freeze” by temporarily preventing any dealings that compete with the Caveator’s interests from being registered. You can find out if there is a caveat on your property by conducting a title search.
The predominant reason to lodge a caveat is:
- to warn the Registrar of Titles and any other person considering dealing with a property of the Caveator’s claim; and
- to ensure that the Caveator is given notice to oppose any dealing with the title of that property before that dealing is registered.
Can I lodge a caveat?
You must have a caveatable interest to be able to lodge a caveat. This means a legally-recognised interest in the relevant property that can’t be protected by any other dealing. Simply having an informal agreement or a verbal understanding with someone does not constitute a legal interest in the land.
- There are many situations which can give rise to a caveatable interest, including:
- Purchasers’ interest under Contract prior to settlement;
- A registered or equitable mortgage or other security interest in the land;
- Contractual rights;
- Family law interest in matrimonial assets;
- An ownership interest in the land, such as a fee simple interest or a life estate;
- A right to occupy the land, such as lease or a licence (in some circumstances);
- Equitable interest through a trust that holds an interest in the land;
- The interest of a trustee in bankruptcy where land has vested in the trustee; and
- An interest arising from a court order, such as an injunction or a receivership.
If you have a caveatable interest, you should lodge your caveat as soon as your interest in the property arises. This ensures that the world is put on notice of your interest, avoiding the possibility of a priority dispute should a third party acquire another interest in the land.
Be aware, however, that lodging a caveat is a serious matter and should not be done lightly. If you lodge a caveat without proper and reasonable legal grounds, the owner can apply to lapse the caveat through a lapsing notice, your caveat may be removed and a Court may order you to compensate any person who suffers a financial loss as a result of your incorrect caveat.
Before lodging a caveat we recommend that you seek legal advice.
Lodging a caveat
To lodge a caveat in Victoria, you will need to submit a completed caveat form with Land Victoria, along with a statutory declaration and the prescribed fee. The caveat form will need to include all relevant details such as:
- the caveator’s name and residential address or registered office, including an address for notices;
- the name and address of the registered proprietor;
- title details; and
- particulars of the legal or equitable estate of interest.
You will also need to provide supporting evidence of your legal interest in the land, such as a contract of sale, a mortgage, dates of agreements or records of conversations.
Most commonly, caveat applications are lodged with the Registrar of Titles through an electronic subscription service called PEXA. Only legal practitioners or licensed conveyancers are eligible to subscribe. Your lawyer can assist you in preparing and submitting the caveat form along with your supporting documentation.
Section 89 of the Transfer of Land Act 1958 authorises the Registrar of Titles to register a caveat on application by a person with a caveatable interest. It’s important to note that the Registrar will register a caveat without assessing the legitimacy of the application or the underlying interest in the land, so to avoid the consequences of lodging an incorrect caveat it is critical that you obtain legal advice beforehand.
After a caveat is lodged with the Registrar of Titles, it effectively prevents the registration of further dealings on the property’s title indefinitely. A caveat will remain on the title until the:
- caveat is formally withdrawn by the caveator;
- caveat lapses;
- caveator consents to another dealing being registered on the title; or
- caveat is removed by a court order.
If a person attempts to register a dealing on the land, the Caveator will receive notice and will have 30 days to assert their interest. If the Caveator does so, and the person attempting to register a dealing persists, it can ultimately lead to an application to the Court to determine the validity of the caveat. If they do not, the dealing will register in most circumstances.
Removing or challenging a caveat
- Generally, there are three ways for a valid caveat to be removed:
Consent and withdrawal by the caveator;
Where a person agrees to remove their caveat, a withdrawal of caveat can be lodged online
- Lapsing notices (non-urgent removal) – section 89A applications
A person with an interest in land affected by a caveat may make an application to the Registrar of Titles for its removal under Section 89A. Under this provision, the owner of land can make an application to the Registrar of Titles, supported by a solicitor’s certificate, to say that the caveator does not hold a caveatable interest.
Upon receiving an application, the Registrar of Titles will then send notice to the caveator of
the application, giving them 30 days to either:
– ignore the application and allow the caveat to lapse OR
– issue court proceedings to substantiate their caveatable interest.
- Lapsing of the caveat – Section 90(1)
A person other than the landowner may lodge certain dealings for registration, which will cause the registrar to serve a notice on the caveator and give the caveator 30 days to either:
– apply to the Court for orders delaying registration of the dealing while a proceeding is commenced and prosecuted to substantiate the caveat; or
– failing action by the caveator, the caveat will lapse
- Court order (urgent removal) – section 90(3) application
If a matter is urgent, or if there is clearly no caveatable interest, then a landowner who is affected by a caveat can apply to the Supreme Court to have the caveat removed under section 90(3). The Caveator will bear the burden of proving that they do have a caveatable interest justifying the caveat remaining on title.
If you require assistance with lodging or removing a caveat over property, or if you have any questions about a caveat, please contact our office.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
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