What is a Caveatable Interest?

What is a caveatable interest?

It is important to determine whether you have a caveatable interest in land before you lodge a caveat.

The NSW Real Property Act provides that a person may lodge a caveat with the Registrar-General if they are entitled to a legal or equitable interest in land. A caveat notifies others that you have a proprietary interest in the property and prevents them from dealing with the property without your knowledge or consent. The Registrar-General will not register any dealings (other than some statutory exceptions) that are inconsistent with your caveatable interest.

How do I determine if I have a caveatable interest?

Caveatable interests include:

  • a buyer’s interest under an agreement for sale;
  • a seller’s lien; and
  • a buyer’s lien.

Examples of non-caveatable interests are:

  • possession of a building site by a contractor;
  • the interest of a person who has improved someone else’s land; and
  • rights arising from an agreement to share profits on the resale of land.

Only those with an express interest in the property (such as a chargee or mortgagee) can claim a caveat. An express interest is where the parties agree to the lodgement of a caveat over the property.

A court judgment against another person does not create a caveatable interest in that person’s property. If you have obtained a judgment against someone, you may be able to negotiate and agree to create a caveatable interest in their property. You can then lodge a caveat to protect your interest.

How do I lodge a caveat?

In NSW, a subscriber to an Electronic Lodgement Network Operator (such as a solicitor or conveyancer) completes the online form provided by NSW Land Registry Services including the following information:

  • The details of the property that you claim to have an interest in and the registered proprietor of the property. You should check this information by conducting a title search.
  • The caveator’s name and address, including the address where notices relating to the caveat may be served. This is required for service of court documents.
  • The nature of the interest you claim and how it arose (e.g. is it a legal or an equitable interest).

What should I consider if I want to include a provision in an agreement charging someone’s land?

Someone owing you money is not in itself sufficient to give you a caveatable interest. If you provide goods and services, and wish to create a caveatable interest and charge the customer’s real estate, you should consider the following:

  • The agreement should contain a clause obliging the customer to grant and register a caveat over the property.
  • Is there an agreed mechanism for withdrawal of the caveat?
  • your agreement should take into account that each State has different requirements for lodging caveats.

A caveat does not arise by specifying the folio identifier and street address in the agreement. A caveat must be lodged in a particular form and manner, satisfying any formal rules.

The agreement should specify who is responsible for drafting and lodging the caveat and who pays the lodgement fee.

How do I remove a caveat?

A caveat can be removed in several ways, most commonly when the property owner issues a lapsing notice which is served on the caveator. The caveator has 21 days from the date of service of the lapsing notice to seek an order from the Supreme Court of NSW for an order extending the operation of the caveat.

What if the caveat has not been lodged properly?

If you lodge a caveat without having a caveatable interest or a reasonable cause, you may be liable to compensate any person who suffers a resulting pecuniary loss (e.g. if you take steps to lodge a caveat over a property without having a caveatable interest, which stops the settlement or sale of the property, you may be liable to pay damages to the injured proprietor for any loss suffered. Also, you will most likely be liable for their legal costs [in addition to your own]).

 

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