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Lodging a Caveat
What is a Caveat?
In legal terms, a caveat is a statutory injunction that prevents the registration of certain dealings with real property. What this means is that a caveat acts as a warning to anyone who deals with, say, a house, that someone has a prior interest in it. In family law caveats are used to ensure that a property you have an interest in isn’t sold or encumbered by a mortgage without your input. For example, if you and your partner live in a house together for 12 years, but you are not registered on the title, if you separate you may be able to lodge a caveat to ensure your ex-partner does not sell the house. There are certain conditions however before someone can lodge a caveat.
Who can lodge a Caveat?
A caveat may be lodged by a person claiming an interest in the land (or their lawyer or agent). A ‘caveatable interest’ may arise in a number of circumstances, e.g. from a registered or equitable mortgage or under a contract. In family law, an equitable interest may arise pursuant to the Family Law Act 1975 due to contributions made to a property by one party during the relationship. Such contributions may be financial, such as paying some money towards the mortgage, or providing assistance to renovations. It is useful to get legal advice on what contributions made during the relationship may establish such an interest.
If you lodge a caveat without reasonable cause you may be liable to pay compensation to any person who incurs a cost as a result. An injured party can apply to the courts to enforce this compensation.
When can I NOT lodge a Caveat?
Being in a marriage or de facto relationship does not automatically give you an interest in your partner’s land. A claim under the Family Law Act or a right to the sale proceeds of the property are also not caveatable interests.
If a company owns the property, being a shareholder of the company or contributing funds to the company towards purchasing the property is not enough to establish a caveatable interest.
How to lodge a Caveat?
Each State and Territory has their own rules and legislation on how to lodge a caveat. In the ACT the Land Titles Act 1925 deals with the rules around caveats, while in NSW the Real Property Act 1900 applies. Generally, however, each State and Territory requires a form to be completed explaining why you have an interest in the property and the details of the property, including the section and block number (or the Torrens Title if in NSW). You will also need to include the name and address of a registered proprietor and sign a statutory declaration (with appropriate witnesses). We recommend that you do a title search on the property to ensure these details are correct, or contact a law firm for assistance. In the ACT this form is then lodged with the Land Titles Office, while in NSW it can be lodged with Land & Property Information (LPI).
What does a Caveat do?
Once registered with the Land Titles Office or LPI, a caveat will prevent other instruments affecting the land or affecting the caveator’s interest in the land being registered with the office. For example, it may prevent certain instruments regarding selling the property being registered.
Some documents can still be registered in relation to the land, despite a caveat being lodged. In the ACT these exceptions can be found in sections 104(4) and (5) of the Land Titles Act 1925 (ACT) and include the registration of a caveat by another person or the registration of a mortgage discharge.
When does a Caveat end?
- When it is formally withdrawn by the caveator
- When the caveat lapses
- When the caveat is removed by an order of the Court
- The caveator consents to another’s registration dealing with the property’s title
How to challenge a Caveat?
If a caveat has been lodged against property you own, you may be able to challenge it. If a caveator does not have proper justification for the caveat (i.e. a caveatable interest), you can lodge an application to remove it, which will cause the caveat to lapse after 14 days (21 days in NSW) if no further application is made by the caveator to the Supreme Court. The caveator is also likely to be liable for any costs incurred as a result of the caveat.
If the caveator has a good reason for lodging a caveat and truly does have an interest in the property, you can still apply for it to be removed, but it is more likely that a court will order the caveat on the title to remain.
If a caveat fails, another option is to apply to the Family Law courts for an urgent injunction to restrain another party doing certain things, such as selling real estate.