FORMALISING PRIVATE ARRANGEMENTS ABOUT THE DIVISION OF PROPERTY AND FINANCES WITHOUT ARGUING IN COURT19 November 2018
Pty, Ltd or NL – What Does Mean?18 June 2021
Protect your interest in a property
A caveat is a statutory injunction that prevents the registration of dealings and plans on a title, provided for under the Real Property Act 1900.
A caveat operates as a warning on a land title to others by noting a person or organisation’s interest in land or property.
Only those with an eligible interest in the land 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 as a result. The party that records a caveat on title is known as the “caveator”.
We recommend that parties always seek legal advice from Maxwell&Co before lodging a caveat.
Once a caveat is recorded it must be removed, or the caveator’s written consent obtained, before any new dealings can be registered relating to the property.
Benefits offered by caveats
- For unencumbered land, caveats can provide an additional layer of fraud prevention by preventing lodgments on the title by other parties.
- Increased protection for property buyers during long settlements by recording their interest in the property on title before it is transferred to them.
- Property owners gain longer term protection. Unlike priority notices, a caveat remains on title until it lapses, is removed by court order, is formally withdrawn, or when the interest in the caveat is satisfied by the registration of a subsequent dealing or plan.
Common uses of caveats
Caveats may be lodged to:
- Prevent the registration of an incoming interest or dealing by other parties. Owners of unencumbered land may use a caveat on their land or estate when it is not protected by other dealings like a mortgage.
- Protect an interest under a contract for sale (purchaser’s caveat).
- Secure a loan. A bank or other lender can place a caveat on title to make others aware of their financial interest in the property.
- Protect an interest such as a lease or mortgage.
- Registration of a delimitation plan.
How to lodge a caveat
We recommend that parties always seek legal advice before lodging a caveat.
- Step 1: Engage Maxwell & Co to prepare a caveat for electronic lodgment, or download and complete the caveat form and relevant exception form in hard copy.
- Step 2: Lodge caveat and relevant exception form in person at NSW LRS and pay fee, or electronically through your solicitor or conveyancer.
- Step 3: Tthe documentation provided will be examined. Particulars of the estate or interest claimed must be set out. In addition, details of any instrument and/or facts that support the claim must be stated.
- Step 4: The Register is updated to record the lodgment of the caveat if it meets the lodgment requirements. Once processed, the caveat is recorded against the title on the Register.
- Step 5: A notice of the caveat will be provided back to the applicant and also sends a notice to the registered proprietor of title if they are not the caveator.
Removing a caveat on a property title
If there is a caveat on your title that you think is unreasonable, we recommend you seek legal advice.
There are several ways to manage or remove caveats that are recorded on a title, including:
- Order of Court
- The caveat lapses
- Obtaining caveator’s consent
1. Order of Court
An objection to a caveat is a matter for resolution between the parties involved or through legal proceedings in the Supreme Court.
The Supreme Court can make a ruling to extend or remove a caveat as it deems appropriate.
For more information, speak with our legal advisor or visit the Registrar General’s Guidelines on caveats .
2. The caveat lapses
A caveat lapses when:
- the interest claimed under the caveat is satisfied by the registration of another dealing; or
- An Application for Preparation of Lapsing Notice is lodged.
For more information, speak with our legal advisor or visit the Registrar General’s Guidelines on lapsing notice
A caveat can be withdrawn by:
- lodging a Withdrawal of Caveat or
- an order of the Supreme Court.
For more information, speak with our legal advisor or visit the Registrar General’s Guidelines on withdrawal of a caveat.
4. Obtaining the caveator’s consent
A caveator may not want their caveat removed but may not object to the lodgment and registration of a dealing or plan. For example, a caveator claiming as an unregistered mortgagee may not object to a lease being granted over the property. In these cases, the caveator can give written consent to allow registration of the subsequent dealing.
When the caveator consents to the registration of a dealing, they also consent to the exercise of any powers that the owner of that interest may gain by registration. For example, where a caveator has consented to the registration of a mortgage, the caveat will not prevent the mortgagee from exercising the power of sale under the mortgage.
When a caveator consents to the registration of a dealing that is prevented by the caveat, the consent must:
- be in writing attached to the dealing; and
- state the full name of the caveator; and
- state the registered number of the caveat; and
- state the type of dealing and the name of the party/parties to which the consent refers; and
- be absolute; any qualification or contingency to the consent is unacceptable; and
- be signed by the caveator or any person authorised to sign a withdrawal of caveat; and
- have the signature of the caveator witnessed if signed by a private party or where the consent is not on a letterhead.
- For more information, speak with your legal advisor or visit the Registrar General’s Guidelines on caveat consent.
For more information, please contact our Conveyancing Team at Maxwell&Co.