There is a common misconception that caveats are a tool to secure the repayment of a debt. Client’s often state to lawyers, “person A owes me money, I will put a caveat over his property and get my money back”. However, it is important to note that the lodgement of a caveat by a person who does not have a caveatable interest can attract severe penalties from the Courts.
This article will explain the purpose of a caveat, who can lodge a caveat and in what circumstances a caveat should be lodged.
What is a Caveat?
The literal translation of caveat in Latin is ‘warning’. It is a notice that is lodged on a property owner’s land title by a third party who claims to have an interest in that persons land. A caveat has the following effect:
- it warns anyone searching the title for that parcel of land that an unregistered interest is claimed over the land; and
- it requires the Land Titles Office to notify the person who lodged the caveat (known as the ‘caveator’) prior to registering any further dealings over the land, and significantly effects the way the land can be dealt with by the landowner (including selling the property).
Who can Lodge a Caveat?
Pursuant to the Land Title Act 1994 (Qld), a caveat may be lodged by:
- a person claiming an interest in the land;
- the Registrar of a Court;
- a registered owner of the lot;
- a person to whom a Court has ordered that an interest in the land be transferred to them;
- a person who wishes to maintain an order of a Court in restraining a registered owner on title from dealing with the land;
- a person objecting to an application for adverse possession (a claim by an occupier of a land to exclusive possession of the land); and/or
- a purchaser under an instalment contract.
The above list is not exhaustive, and there many other situations which may give rise to a caveatable interest, which may allow a person the right to lodge a caveat over another person’s land to protect their interests.
In what circumstances should a Caveat be lodged?
A caveat should be lodged as soon a caveatable interest has been established. Caveats can and should be lodged in the following circumstances as an effective tool to protect ones interest in another person’s land:
- When there are two purchasers buying the same property
Surprisingly this is a mistake that occurs frequently, particularly when there are two real estate agents involved in the sale of the property and as a result the property is ‘sold’ to two different purchasers. In this circumstance, the first purchaser to lodge the caveat will have priority as purchaser, while the other may only be left with a potential claim for compensation.
- In family law matters whereby one party to the relationship is not a registered owner on title
Although one party to the relationship may not be the registered owner of the property on title, this does not mean that they do not have an equitable interest in the property that is, a beneficial interest in the property that may give rise to the right to formally acquire legal title to the property. In such circumstances, a caveat should be lodged to prevent the registered owner on title from:
- Selling the property; and/or
- Borrowing against the property, thereby reducing the equity in the property.
- A creditor who wishes to prevent the debtor from disposing of the property
A creditor may have an agreement with a debtor for the repayment of a debt. In this circumstance a caveat would be an effective tool to secure the loan and prevent the debtor from disposing of property. It is important to note however that the agreement must contain words to the effect that if the loan is unable to be repaid, security of the debtor’s property can be taken out.
There are numerous other circumstances which may give rise to a caveatable interest, and the law surrounding the lodgement of caveats is not without its complexities. Should you have queries in relation to your rights to lodge a caveat, please contact our experienced Gold Coast lawyers on 07 5563 8970 to discuss your individual queries.