Our team often receives enquiries asking whether we could assist with lodging a caveat on a title to land to prevent a sale from going ahead.

So what is a caveat?

The word “caveat” is derived from the Latin word for “beware”- a warning or caution. It is primarily used to protect the unregistered interest in the land that is not capable of immediate registration on the title. Once a caveat is registered on the title, it will prevent the registration of any instrument or dealing with the land which may defeat or diminish the interest which the caveat claims to protect. You can think of it as a barrier to restrain any party from doing anything to the title to land that is contrary to the interests of the person lodging the caveat. In short, a caveat allows the opportunity and time for unregistered and equitable interests to be dealt with between the parties or considered by a competent court whilst the status quo of the title is preserved.

How to lodge a caveat?

The person who claims to have a caveatable interest in the land is “the caveator” and the registered owner of the land and any other person affected by the caveat is “the caveatee”.

To lodge a caveat, a Form 11 needs to be prepared and signed by the caveator or the caveator’s solicitor and lodged with the Titles Registry. The caveat form can be lodged via PEXA.

It is not the function of the Registrar of Titles to decide the rights and wrongs of any interest claimed by the caveator.

When will a caveat lapse?

Once a caveat is lodged, the Titles Registry will notify the caveatee that a caveat has been lodged on the title by service of a notice.

The caveatee, upon being notified of the caveat, may serve a written notice on the caveator, requiring the caveator to start a court proceeding to establish his or her interest claimed in the caveat. The caveatee must also notify the Titles Registry within 14 days of service of the notice on the caveator that this action has been taken.

Once the caveator is served with the notice from the caveatee, if the caveator does not want the caveat to lapse, the onus of proof then rests with the caveator to establish that the caveat was not lodged or continued without reasonable cause. Specifically, the caveator must take the following two steps:

a)  Start a court proceeding to establish the interest claimed under the caveat within 14 days of being served with the notice; and
b)  Notify the registrar within 14 days that a proceeding has been started.

If the caveator fails to take the above mentioned steps, the caveat will lapse 14 days after the notice is served on the caveator.

If a notice (from the caveatee) is not served on the caveator, the caveator has 3 months in which to start court proceedings to establish his or her interest claimed in the caveat and notify the registrar that the proceedings have started. In such a case, if the proceedings are not started within 3 months, the caveat will lapse after the expiry of the 3 month period, unless the caveat was lodged with the consent of the registered owner (which will be a non-lapsing caveat).

Compensation for improper caveat

Under s130(1) of the Land Titles Act 1994, the caveator who lodges or continues a caveat without reasonable cause must compensate any person who suffers loss or damage as a result.

In the case of Love v Kempton [2010] VSC 254, Mr Kempton was the highest bidder at a property auction sale. After winning the auction, Mr Kempton refused to sign the contract of sale and attempted to negotiate the terms of the contract with the property owner Mr Love. Mr Love subsequently decided to sell the property to the underbidders. Mr Kempton then lodged a caveat over the property in order to protect his interest pursuant to “a contract for sale”. The court found that Mr Kempton had no arguable claim and was guilty of “misuse of the caveat procedure”. Mr Kempton was ordered to pay Mr Love’s costs on an indemnity basis.

In a proceeding for compensation in Queensland, it is presumed that the caveat was lodged or continued without reasonable cause unless the caveator proves that the caveat was lodged or continued with reasonable cause.

To avoid being caught in the situation described above, a caveat should be lodged with care and whether a caveatable interest exists should be properly assessed prior to lodging the caveat.

What could constitute a “caveatable interest”?

We provide below a non-exhaustive list of examples where the Court held that a caveatable interest exists for your ease of reference:
a)  The interest of a purchaser under a valid unconditional (but not yet settled) contract of sale (unless the lodging of a caveat is prohibited under the terms of the Contract);
b)  The interest of a purchaser under an instalment contract;
c)  A grantee’s interest under an option to purchase land;
d)  The interest of a beneficiary under a constructive, resulting or implied trust.

Below is a non-exhaustive list of examples where the interest of the caveator does not constitute a caveatable interest:
a)  The interest of a purchaser under a conditional contract of sale where there are unsatisfied condition precedents;
b)  A purchaser of a proposed lot under an off-the-plan contract of sale prior to the registration of the survey plan is not entitled to an equitable interest in the land; or
c)  A vendor’s lien (for unpaid purchase money), which is not capable of giving rise to any equitable lien over the land.

Should you consider lodging a caveat, it is crucial that you seek legal advice on whether you have a caveatable interest to start with, which needs to be assessed on a case-to-case basis.

Contact Us

To speak to one of our experienced Property & Business lawyers call 1800 999 529, email mail@rmold.newwebsite.live or submit an enquiry below.

We are available to meet with you at any of our local offices (Brisbane, Gold Coast, Beenleigh, Cleveland and Jimboomba) or by telephone or video-conference.

This article is for your information and interest only. It is not intended to be comprehensive, and it does not constitute and must not be relied on as legal advice. You must seek specific advice tailored to your circumstances.