What Does It Mean If There’s a Caveat on a Property?
A caveat is a legal term used in Australia that acts as a warning that there may be a claim by an outside party on your property. But, what should you do if you discover that there’s a caveat on a property that you’re interested in buying?
Buying property is not something most people do every day. For some, it is a once-in-a-lifetime experience. But purchasing a property can go from exhilarating to a headache in no time when you start to get into the legalities. What does it mean if there is a caveat on a property? What is the purpose of a caveat? How can this affect you? Ask questions from our professional lawyers and solicitors who are dealing in Property Conveyancing Melbourne and Property Conveyancing Brisbane.
What is a caveat?
A caveat is a notice at large that is recorded on the title of a property to protect the interest of a person who believes they have a claim to the title.
What is the purpose of a caveat?
The Transfer of Land Act 1958 authorizes a Registrar to register caveats against the title of the land on the application of a person.
The main purpose of lodging a caveat is:
- To warn the relevant Registrar of Titles of a claim; and
- To ensure that the caveator is given the notice to opposing any dealing with the title of that land before that dealing can be registered.
Why might someone lodge a caveat?
There are many reasons why someone might feel they need to lodge a caveat. The most common causes include:
- A buyer’s interest acquired following a contract of sale with the vendor;
- Equal interest through a corporation;
- An interest as an unregistered mortgagee;
- A family law interest, such as in marital assets; and
- The interest of a trustee in the case of bankruptcy.
Can a caveat be removed?
The most common way that caveats are removed is by the person lodging withdrawing their application willingly. Usually, this happens when the land that is subject to a caveat is being sold, or the interest they were claiming becomes subject to a mortgage. If the caveat secures a sum of money that the person who lodged it was owed, the landowner could successfully invite them to withdraw the caveat when they have found a buyer and are looking to settle, usually in return for a share of the sale proceeds.
Can damages be awarded when lodging a Caveat?
If someone is found to have lodged a caveat without having a reasonable cause to do so, the court can order payment of compensation to the person who suffers loss and damage because of the unnecessary caveat.
Damages suffered can include:
- The property in question has lost value caused by the caveat;
- Costs paid by the vendor due to a delay in settling a property sale.
To be awarded compensation, a plaintiff must demonstrate that there was no interest in the land as stated in the caveat. They must also be able to prove that the person lodging the caveat did not have an honest or reasonable cause to claim that they had that interest.
If you discover that there is a caveat associated with a property you are looking to purchase, your best solution is to seek advice from a conveyancing lawyer. A property caveat can significantly delay your property settlement, so you will need to know more about the case.
Enlisting the services of a reputable and experienced conveyancing lawyer can also safeguard you against the consequences of a caveat being used during a property sale. If the caveat requires settlement in court, your conveyancing lawyer can take you through the entire process.
If you’re in the process of buying or selling a property under a caveat, always seek the assistance of a reliable property conveyancer. Jim’s has offices Conveyancing Melbourne and Conveyancing Brisbane and can provide you with comprehensive advice and service moving through your property transaction.