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What Is A Caveat And Do You Need One?

Introduction to Caveats In Queensland title (ownership) in land (including where applicable, improvements – e.g a house) is determined by registration of your interest with the Land Titles Office, headed by the Registrar of Land Titles. Given the importance of registration, if you have an interest in land that for some reason is not registered […]

What Is A Caveat And Do You Need One?

What Is A Caveat And Do You Need One?

By Aylward Game - Sep 30, 2016 Courts, Property Law

Introduction to Caveats

In Queensland title (ownership) in land (including where applicable, improvements – e.g a house) is determined by registration of your interest with the Land Titles Office, headed by the Registrar of Land Titles.

Given the importance of registration, if you have an interest in land that for some reason is not registered there is a risk that another person may register their interest before yours with the other person’s interest ranking above or having a higher priority than your interest.

In such circumstances we may recommend you consider lodging a “caveat” on the title to that land to protect your interest. The word caveat means ‘beware’ and lodging a caveat warns anyone dealing with the land that someone has a priority interest in that land.

However it is important to understand that a caveat does not provide all of the benefits of registration of your interest and should never be seen as an alternative to registering your interest on the title to the land.

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What is a Caveat?

A caveat is a notice to the Registrar and the world at large which, subject to some exceptions, prevents the registration of an instrument or document claiming another interest in the land affecting the interest claimed by the caveator (the person who lodges and receives the benefit of the caveat) in that land until the caveat is withdrawn, removed, lapses or is cancelled.

Who Can Lodge a Caveat?

Only a person who has a caveatable interest is entitled to lodge a caveat or to instruct their lawyer to lodge a caveat on their behalf. Such parties include

  • a person claiming an interest in land;
  • a person to whom an Australian court has ordered that an interest in land be transferred;
  • a person who has the benefit of a subsisting order of an Australian court in restraining a registered proprietor (owner) from dealing with land; and
  • by a purchaser under an instalment contract

There are a number of circumstances where a person might claim an interest in land and wish to consider lodging a caveat.

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Some typical examples are as follows:

  1. EXAMPLE 1 – A Purchaser of Land
    A person who has entered into a contract to purchase land (purchaser), on that contract becoming binding between them and the seller, acquires what is known as an “equitable interest” in the land being purchased. It is this equitable interest that qualifies as a “caveatable interest” entitling the purchaser to lodge a caveat. The purchaser will not be the legal owner of the land until the transaction settles and their interest is registered with the Land Titles Office. The purchaser’s interest is therefore subject to a risk that someone else could register another interest in the land before the purchaser registers theirs. By lodging a caveat a purchaser can prevent others from registering interests ahead of their interest.
  2. EXAMPLE 2 – Parties to Family Court Proceedings
    This would cover a person who is a party in family law proceedings and wants to prevent any dealings with the property before those proceedings are resolved.
  3. EXAMPLE 3 – A Person Claiming a Trust in the Property
    This would cover a person who has contributed funds for the purchase/maintenance of a property but holds no legal interest in the property.

Lodging a caveat

It is best to consult a lawyer so that advice can be obtained as to whether a caveatable interest actually exists, whether there are any contractual prohibitions on the lodging of a caveat, and whether further registrations to be made on the caveator’s behalf may be affected.

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There is also a risk that the caveatee (person over whose land the caveat has been lodged) may bring a Supreme Court action for the removal of a caveat and if successful the caveator may be exposed to the risk of costs and compensation orders.

Effect of a Caveat

A caveat has the effect of prohibiting the registration of an instrument or document, affecting the land or interest claimed by the caveator until the caveat is withdrawn, removed, lapses or is cancelled.

Lapsing of Caveats

Caveats will lapse (hence be of no effect) after the expiry of three (3) months from the date of lodgement unless you register your interest (if possible) or commence court proceedings against the caveatee in respect of the interest claimed by you.

Conclusion

It is not possible in a short article to cover all aspects of caveatable interests and caveats but we are always happy to discuss with you the following matters:

  • whether you have a caveatable interest;
  • any risks that you may face by lodging a caveat;
  • whether a caveat should be lodged to protect your position;
  • assist you in defending an application to remove the caveat;
  • registration of your interest (if available) on a timely basis; and
  • instituting legal proceedings, in support of the interest claimed when lodging the caveat, on a timely basis

 

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Please check out some other important articles on our blog:

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