When should you lodge a caveat?

Caveats are an important tool that may be used to protect a property interest

What is a caveat? A caveat is a warning that a person (the caveator) believes they have a legal or equitable interest in a portion of land, entered almost immediately onto that land's Certificate of Title. A caveat applies a level of restriction on registration of further interests on the land:

• Absolute restriction (for example, a covenant against the subdivision of neighbouring land);
• Restriction unless the instrument is expressed subject to the caveator's claim (for example, a leasehold, equitable mortgage or charge interest); or
• Restriction until after notice of any intended registration or dealing to be given to the caveator.

Once lodged, a caveat will normally extinguish opposing unregistered interests.

When should you consider lodging a caveat? You should consider lodging a caveat if you have a proprietary interest in land you wish to protect. Interests capable of supporting a caveat include:

1. An option to purchase land;
2. A mortgage, lease or charge;
3. An easement or restrictive covenant (such as right of way);
4. Interests relating to trusts; or
5. An interest in fixtures attached to the land.

Why is it important to ensure your caveat is lodged properly?

1. If you lodge an improper caveat, or lodge a caveat without reasonable cause, the registered proprietor (owner of the land) may summon you to appear before the Supreme Court to show cause why the caveat should not be withdrawn. If it is shown your lodgement was improper, you may be liable to pay compensation for any damage caused.
2. If you lodge a caveat that goes beyond what is necessary to protect your rights, for example lodging an absolute caveat when only a "subject to claim" caveat was required, you may be liable to pay compensation for damages caused.
3. If you incorrectly describe the land, do not properly specify the interest or make any another mistake, you may be unable to enforce your interest at a later date.

If you need to lodge a caveat: If you think you need to lodge a caveat to protect a property interest, you should seek legal advice first.

Sources: Lodging a Caveat (2007) Landgate, available here; Doug Solomon, 'Caveats' (February 2015) Vol 42 Number 1, Brief, 37.

Liability limited by a scheme approved under Professional Standards Legislation.

The information contained in this article is general in nature and is intended to be introductory only you should not rely on it in place of legal advice. If you require advice please contact us.

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Image: https://www.cpadvisory.com.au/news-articles/perth-property-leads-nation-set-for-double-digit-growth-this-year/