What is a Caveat?
Let’s say you are a bit slow paying your water bill.
The water company can put a caveat on your property so that you can’t trade or sell it.
Once they slap a caveat on your property you can’t do anything about it until you go to the Supreme Court and ask for it to be removed….a huge expense to you.
But it’s worse than that. While there is a caveat on your property it goes onto your credit rating to, and that can be even harder to get rid of.
One of the worst offenders for putting caveats on property are Queensland’s Unity water. They supply the Sunshine Coast and Moreton Bay regional council areas. If you fall even a little behind your water payments they have been known to slap a caveat on the property. Once they do that, the trouble starts.
Caveats place a “freeze” on other dealings with the title to land until the matter the subject of the caveat has been resolved. You can think of it as a barrier to others doing something to the title to land. Accordingly, a working knowledge of the operation and effect of a caveat is an essential component of a commercial or property lawyer’s skill set.
For example, if your client has an interest in land that cannot be protected by the registration of another type of dealing, the lodgment of a caveat against the title to the land would be a prudent step to take. For example, if a mortgage document creating an interest in land cannot itself be registered for any reason (such as the refusal on the part of the mortgagor (registered proprietor) to produce the certificate of title to enable registration of the mortgage), then the mortgagee can lodge a caveat on the title protecting the interest created under the mortgage.
Once a caveat is lodged and recorded against the folio of the register for the land, the Registrar-General/Recorder of Titles is required to send a notice to the registered proprietor of that land. This puts the registered proprietor on notice of the existence of the caveat and, accordingly, the registered proprietor may then take action to have the caveat removed.
What is a Caveat — Legal Definition
A caveat is a statutory injunction within the Real Property Act 1900. (Refer to: https://www.williamroberts.com.au/News-and-Resources/News/Articles/Caveats–Writs-and-Priorities-A-Guide-to-Protecting-Your-Interests )
A caveat informs others that you have a proprietary interest in the property and will prevent the registration of a dealing on the property without your consent
What is a caveatable interest?
Section 74B of the Real Property Act 1900 states that a person must have a legal or equitable estate or interest in land.
Please note that the interest must be in the land, not merely a contractual or personal right.
The interest must also be express and exist at the time of lodgment, it cannot be a future interest.
Under section 74P of the Real Property Act, a person can be liable to pay any person who sustains pecuniary loss attributed to the lodging of a caveat without reasonable cause.
How Can You Remove a Caveat?
The procedure for the removal of a caveat is for the party wishing for its removal to write to the Caveator, and invite them to execute a Withdrawal of Caveat to remove the caveat lodged by them from the title to the property.
If they do not respond to the request to withdraw the caveat, a Lapsing Notice can be filed with the Registrar General for the removal of the caveat.
But the Caveator can then (1) make an application to stop the lapsing of the caveat or (2) not respond to the notice which will result in the caveat automatically falling away.
The (Q’ld.) LAND TITLE ACT 1994 – SECT 126 explains how to Lapse a Caveat:
(Q’ld.) LAND TITLE ACT 1994 – SECT 126
Lapsing of caveat
126 Lapsing of caveat
(1) This section does not apply to a caveat if—
(a) it is lodged by the registered owner; or
(b) the consent of the registered owner, in the appropriate form, is deposited when the caveat is lodged; or
(c) an office copy of a court order mentioned in section 122 (1)(d) or (e) is deposited when the caveat is lodged; or
(d) it is lodged by the registrar under section 17 ; or
(e) it is lodged other than under this division.
(1A) However, this section applies to a caveat lodged by the registered owner of a lot if—
(a) the lot is subject to a mortgage; and
(b) the grounds stated in the caveat relate to the actions of the mortgagee in relation to—
(i) if the mortgage is registered—registration of the mortgage; or
(ii) the mortgagee’s power of sale.
(2) A caveatee of a caveat to which this section applies may serve on the caveator a notice requiring the caveator to start a proceeding in a court of competent jurisdiction to establish the interest claimed under the caveat.
(3) The caveatee must notify the registrar, in the way the registrar requires, within 14 days of service of the notice on the caveator.
(4) If a caveator does not want a caveat to which this section applies to lapse, the caveator must—
(a) start a proceeding in a court of competent jurisdiction to establish the interest claimed under the caveat—
(i) if a notice under subsection (2) is served on the caveator—within 14 days after the notice is served on the caveator; or
(ii) if a notice under subsection (2) is not served on the caveator—within 3 months after the lodgement of the caveat; and
(b) notify the registrar, in the way the registrar requires, within the 14 days or the 3 months that a proceeding has been started and identify the proceeding.
(5) If the caveator does not comply with subsection (4) , the caveat lapses.
(6) The caveator is taken to have complied with subsection (4) (a) if, before the caveat was lodged—
(a) a proceeding has been started in a court of competent jurisdiction to establish the interest claimed under the caveat; and
(b) the proceeding has not been decided, discontinued or withdrawn.
(7) The registrar may remove a caveat that has lapsed from the freehold land register.
The (Q’ld.) LAND TITLE ACT 1994 – SECT 127 also explains how to remove a caveat:
Removing a caveat
127 Removing a caveat
(1) A caveatee may at any time apply to the Supreme Court for an order that a caveat be removed.
(2) The Supreme Court may make the order whether or not the caveator has been served with the application, and may make the order on the terms it considers appropriate.