What is a Caveat?
A caveat is a formal registration of a legal or equitable interest in land. If you are the owner of land in NSW and someone has lodged a caveat on your land, the Registrar-General will send you written notice. Lodging a caveat can prevent further dealings with the property until it’s removed. Following are ways to remove a caveat in New South Wales.
How do you remove or withdraw a caveat in NSW?
1. Formal Withdrawal
The person lodging the caveat (the caveator) can withdraw it by instructing a solicitor or conveyancer who subscribes to an Electronic Lodgement Network Operator (ELNO) (such as PEXA) to lodge a Withdrawal of Caveat form electronically with NSW Land Registry Services [NSWLRS] (the fee is $147.70 as at October 2021).
Who else can apply to withdraw a caveat?
- if joint tenants hold a caveat and one caveator dies, the surviving caveator;
- the executor, administrator or trustee of a deceased caveator;
- the Australian Securities and Investment Commission (ASIC); and
- a trustee when the caveator is an infant or is deemed mentally incapable.
This process is only suitable for a caveator who wishes to withdraw the caveat. Where the registered owner, or another party with a relevant interest, wishes to remove the caveat, then the other methods set out below should be used.
You may also remove a caveat if it lapses. This can occur when:
- the caveator’s interest is satisfied because another party registers another dealing (e.g. if a caveator is an unregistered mortgagee and the mortgage is discharged);
- the registered owner or a party with registered interest lodges an Application for Preparation of Lapsing Notice; or
- a party lodges a dealing that the caveat prevents together with an Withdrawal of Caveat.
If the caveator refuses to withdraw formally, the property owner or another interested party may lodge (electronically via an ELNO) an Application for Preparation of Lapsing Notice to remove the caveat. The property owner may register another dealing on the land, which the caveat prevents, and apply for the lapsing of the caveat. The caveat will lapse and expire 21 days after the Notice has been lodged.
3. Court Orders:
a. Extending a Caveat
A caveator can apply to the Supreme Court of NSW seeking an order to extend the caveat. They must make the order and lodge it with the Registrar within 21 days from receiving the lapsing notice. A court will only honour a caveator’s order if the claim has ‘substance’. The onus of proof is on the caveator, and the court will decide whether the balance of convenience favours retaining the caveat.
Where a caveator is served with a lapsing notice and does not want their interest removed, they can give their written consent to extend the caveat. Such consent must include:
- the full name of the caveator and registered number of caveat;
- type of dealing consented; and
- caveator’s signature (or their solicitor).
The consent must be absolute without any conditions. Removing a caveat by lapsing is most appropriate where it is unlikely the caveator will fight back or commence proceedings, and will instead either consent or allow the caveat to lapse willingly. Alternatively, lapsing is the best option where you cannot locate the caveator or they no longer exist (e.g. deregistered company).
b. Withdrawing a Caveat
A party can apply to the Supreme Court for an order that a caveat be withdrawn. The party must lodge the application with the court together with a request form. This option is suitable if the need to remove the caveat is urgent, or where a party expects opposition from the caveator. The caveator bears the burden to establish a caveatable interest and reasonable cause (i.e. an interest in the land). (see Real Property Act Part 7A)
Deciding which process to use to remove a caveat depends on the circumstances. If:
- the caveator no longer has an interest or wishes to withdraw, they can do so by a formal withdrawal;
- you wish to remove the caveat and consider a dispute unlikely, you should file an Application for Preparation of Lapsing Notice;
- the need to remove the caveat is urgent, or you anticipate a dispute, an application to the Supreme Court may be the best option.