Being that property is the easiest way to amass wealth in Australia, putting a caveat on a property is an important legal tool that can protect an individual or entity’s interest in real estate. As a legal mechanism, a caveat serves to notify and prevent others from dealing with the property in a manner that could adversely affect the caveators claimed interests.
Understanding the intricacies and caveats, including the grounds for lodging and the legal implications is essential for safeguarding property rights and interests.
What is a Caveat on a Property?
A caveat on a property is a statutory injunction that is used to protect an interest in the proceeds of a property. Caveats act as a block or a freeze on the property and prevents the registration of dealing and plans on a title.
The word caveat comes from the Latin for ‘beware’, and lodging a caveat helps warn anyone dealing with the property that a third party has a prior interest.
What are the reasons to put a Caveat on a Property?
There are a number of reasons why someone would consider putting a caveat on a property, as a legal notice to signal that a third party claims an interest in that property. By lodging a caveat on a property, the individual prevents any dealing on the property without their consent. This safeguard ensures that their rights or claims are acknowledged and protected until the issue is resolved or the caveat is withdrawn.
- Offers Protection From Other Interested Purchasers
When a buyer has signed a contract to purchase the property, they may lodge a caveat to make sure that the property cannot be sold to another individual before the settlement is complete. - Prevents Fraudulent and Unauthorized Transactions
A caveat can be lodged to prevent unauthorised transactions on the property’s title, such as fraudulent transfers or sales, ensuring that any transaction requires the consent of the person who lodges the caveat.
- Securing Financial Interests
An individual who has an equitable interest in a property, such as through financial contributions to the property’s purchase or improvement, may lodge a caveat to protect their interest.
- Enforcing a Court Order
If there is a court order relating to the property, such as a judgement for the payment of money, a caveat can be lodged to prevent the sale or transfer of the property until the court order is satisfied.
- Protecting a Beneficiaries Interest
If someone has a financial interest in a property through a will or a trust, they may lodge a caveat to protect their interest until the property is distributed according to the terms of the will or trust. - Securing a loan
A lender may place a caveat on a property to secure a loan. This ensures that the lender’s interest is protected and that the borrower cannot sell the property without repaying the loan.
How to put a Caveat on a Property
Lodging a caveat on a property involves several steps to ensure that it is done correctly and legally. Here are the steps for putting a caveat on a property in NSW:
- Determine Eligibility
Firstly, it is important to ensure that you have a legitimate interest in the property – be that equitable, legal or statutory right.
- Engage a Solicitor or Conveyancer
Secondly, it is important at this stage to retain the services of a property solicitor or conveyancer to assist with the legal requirements of lodging a caveat on a property.
- Prepare the Caveat Form
Obtain the caveat form from the NSW Land Registry Services and ensure that you fill it out correctly. This form will require detailed information about the property and the nature of your interest.
- Lodge the Caveat
Submit the completed caveat form and support office to the NSW Land Registry Service, either online or in person. Your solicitor or conveyancer can assist you with this step.
- Await Response
Once the caveat is lodged NSW Land Registry Services will examine the documentation to ensure that it meets the lodgement requirements. Once processed the caveat is recorded against the title on the property Register.
- Monitor the Caveat
The NSW Land Registry Service provides notice of the caveat back to the applicant and also sends a notice to the registered proprietor of title if they are not the caveator. The caveat will remain in effect until it is withdrawn by you, removed by court order, or lapses under certain conditions.
Conclusion
Understanding the nuances of lodging and dealing with caveats is crucial for protecting property rights and interests, and it is important to fully understand this complex matter.
If you have any questions about the items raised in this blog, or about caveats in general, please don’t hesitate to contact the property law team at Owen Hodge Lawyers. We have a vast array of solicitors and conveyancers who have a wealth of knowledge about caveats and property matters in NSW. Get in touch with us today.
Frequently Asked Questions on Caveats
The costs associated with lodging a caveat are set on a case by case basis. There is a cost to lodge the caveat set by the NSW Land Registry Service as well as associated fees to retain a solicitor or conveyancer to assist with this process.
Any person or entity with a legal or equitable interest in the property, such as a purchaser, a lender, or someone with contractual or beneficial interest can lodge a caveat.
A caveat, once lodged, can potentially halt the sale of a property. It serves as a legal roadblock, notifying any potential buyers and parties that there is a secondary interest in the property.
Yes, the property owner or any interested party can challenge a caveat by serving a notice to the caveator, prompting them to commence legal action to substantiate the claim. If the caveator fails to act, the caveat may be removed.
Only those individuals with an eligible interest in the land and property can record a caveat on title. If you lodge a caveat without ‘reasonable cause’, you may be liable to pay compensation to any person who suffers a pecuniary loss and/or potential liability for any damages suffered by the property owner or other affected parties.
A caveat remains in place until it is withdrawn by the caveator, removed by the NSW Land Registry Service upon a successful challenge, or lapses due to failure to take required legal action.
If a caveat is lodged against your property, it is advisable to seek legal representation to understand the nature of the claim and explore options for challenging or negotiating with the caveator to resolve the matter.