What is a caveat?
The Real Property Act 1900 (NSW) regulates caveats in New South Wales, outlining the processes for their lodgement, management, and removal.
A caveat is a statutory mechanism similar to an injunction. It restricts certain dealings with land. It provides notice of an individual’s or entity’s caveatable interest in land without needing a court order. A caveat acts as a legal warning by notifying others of these interests. It is lodged on a land title to protect those interests. A caveat effectively “freezes” the registration of certain dealings. It restricts the registered proprietor from selling, transferring, or dealing with the property until removed.
You may only lodge a caveat if you have an ‘eligible interest in the land’. Upon lodging a caveat, you become known as the ‘caveator’.
A caveat may only be removed by the following courses of action:
- Court Order: A party with an interest in the property, typically the registered proprietor, may apply to the Supreme Court for an order to remove the caveat. The court will assess whether the caveator has a valid caveatable interest and, if not, may order its removal.
- Withdrawal by the Caveator: The caveator can voluntarily withdraw the caveat by lodging a withdrawal form with NSW Land Registry Services. The caveator usually withdraws the caveat when resolving the dispute or deciding not to assert their interest in the property.
- Lapsing by Notice: The registered proprietor or an interested party can serve a lapsing notice on the caveator. This notice gives the caveator 21 days to obtain a court order to maintain the caveat. If the caveator fails to do so, the caveat will automatically lapse. Once the caveat lapses, it removes the restriction on the property.
Do I have a caveatable interest in the land?
To lodge a caveat, you must have a legal or equitable interest in the land:
- Legal Interest: This arises from enforceable rights over the property, such as holding it as security for a loan or under a registered mortgage.
- Equitable Interest: When you do not have a legal interest, you may still have an equitable interest. This occurs when you have rights recognised in equity, such as being a purchaser under an unregistered contract for sale or a beneficiary entitled to property under a trust.
Considerations When Lodging a Caveat
Lodging a caveat without valid grounds can expose you to legal action, as the registered proprietor may claim damages for losses caused by delays in dealing with the property. Given the potential consequences, it is essential to seek legal advice from experienced property solicitors before lodging a caveat. If you require any advice regarding lodging a caveat, contact us here.
