A caveat is a type of interest in property that prevents it from being sold, or dealt with in other ways by property owners.
It isn’t technically a registered interest, but a statutory injunction that puts the Registrar on notice that the registered proprietor is holding the property subject to another interest.
As well as preventing the registration of certain instruments, and certain dealings with the land, a caveat also gives notice to anyone wanting to purchase the property that there is a caveatable interest against it. The term ‘caveat’ comes from Latin and it means to ‘beware.’
Common Uses Of Caveats
When a caveat is lodged against a property, it is because the caveator (the person lodging the caveat, and in whose favour it operates) is attempting to protect an interest they have in the property.
For the caveat to be validly lodged and maintained, it must be claiming a caveatable interest. There are strict rules about what kind of interest qualifies; broadly, the interest claimed must be a presently existing equitable interest (not a registered interest) connected to the property, that the caveator is entitled to protect. For example, a caveatable interest might be a mortgage or an easement, but it cannot be a beneficiary’s interest in a discretionary trust.
Is There A Caveatable Interest?
The question of whether or not an interest is caveatable can be complex, and other formal legal requirements also apply to the lodgement of a caveat.
For this reason, if you believe you have a caveatable interest in a property, it is critical that you seek legal advice, as there can be serious consequences for lodging a caveat if you do not have proper grounds to do so.
A caveator is not required to prove their interest in the land at the time of registration, but they may need to do so at a later date in Court.
Where a caveat is lodged or maintained without reasonable cause, the caveator can be made to pay compensation, including exemplary damages (i.e., punitive damages) to parties who suffer loss or damage as a result.
How Is A Caveat Lodged On A Property?
A caveat must be lodged in the required form with both the Lands Titles Office and the Department of Natural Resources. Caveats must now be lodged electronically (with some exceptions), and a lodgement fee will apply.
When a caveat is lodged, it is recorded on the property title, and the registered owner and any other parties with an interest in the property (eg., a mortgagee) will be notified.
How Long Does A Caveat Last?
A caveat will remain on a property until it is lapsed, withdrawn by the caveator, cancelled by Titles Queensland, or removed by application to the Supreme Court.
A second caveat which purports to claim the same interest cannot be lodged without permission from the Court.
How Can I Have A Caveat Removed?
In general, after a caveat is lodged, the caveator has three months to commence court proceedings to maintain the caveat, or it will lapse.
The caveatee (the property owner) can instead serve a notice on the caveator within fourteen days of the lodgement of the caveat, demanding the caveator start court proceedings to prove the claimed interest in the property. If the caveator does not commence court proceedings in fourteen days, the caveat will lapse.
A caveatee may also apply to the Supreme Court to have the caveat removed, or to Titles Queensland to cancel the caveat in certain circumstances.
It should be noted that there are exceptions to the lapsing provisions in the Land Titles Act 1994 (Qld). If there is a caveat on your property, you should seek legal advice as to the best way to have it removed.
How Does A Caveat Effect My Property Settlement?
A caveat gives notice to the Registrar that there cannot be dealings on the property. This means a property sale cannot go through while the caveat remains.
If you are the Seller and you do not wish to contest the validity of a caveat, your conveyancer can arrange a for it to be removed and any related debt paid out at settlement if the Buyer’s solicitors agree.
How Will I Know If There Is A Caveat On My Property?
Your conveyancer will perform title searches as part of their role; one title search should be done early in the process, to reveal any registered interests, including caveats, against the property. Another title search will be done right before settlement, to ensure no interests have been lodged in the intervening period.
The law of caveats is complex, and it is important to seek legal advice if your property is effected by one, or you believe you have a caveatable interest in another’s property.
If you have any questions about caveats, or any other aspect of property or conveyancing law in Queensland, reach out to one of our friendly, expert solicitors today.
The above is not legal advice and is general information only
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