Caveat - Warning!
by The FindLaw Team
Once a caveat has been accepted for lodgement, a person deals with the land subject to a caveat at their own risk.
What is a Caveat?
A caveat is a notice that a person claims a particular unregistered interest in the property. The person lodging the caveat (the caveator) will provide details of their claim and means for them to be formally contacted in connection with the caveat. The relevant government body will then notify anyone with an interest in the property who is affected by the caveat.
Unregistered interests in land, by their nature, are not always easy to define. However, a caveat could be lodged by:
- A person with an equitable interest in the land under a contract of sale;
- A seller of the land who has received part of the instalments for the purchase price, but is no longer the registered owner;
- A purchaser who is paying the purchase price in instalments, but is not the registered owner;
- A person with a right of access to the land (eg by an unregistered easement); or
- A tenant under an unregistered lease.
When can a Person Lodge a Caveat?
A caveat can be lodged by:
- A person who claims to have an interest in the property;
- The registrar, usually to protect the interests of the State or a vulnerable person, or to give effect to a court order;
- The registered owner of the property;
- A person who has the benefit of a court order concerning the land; or
- In certain cases, a lender under an equitable (that is, an unregistered) mortgage.
Once a caveat has been lodged, people are assumed to deal with the property at their own risk. This means that the usual rules of registered interests taking priority will not necessarily apply. For example, a person who is in possession of land and claims to be the purchaser paying by instalments to the current registered owner would ordinarily need to seek registration as the owner to protect their interest (hence why most land purchases involve finance to ensure that the owner gains the full purchase price in exchange for transferring full ownership). However, if this unregistered owner were to lodge a caveat, the registered owner / seller could not easily attempt to sell the land to a second person.
A caveat will act to prevent the registration of a further dealing with the land that affects the caveated interest, unless the caveator consents or the caveat lapses, is cancelled, rejected, removed or is withdrawn by the caveator.
Dealing with a Caveat
Under the Land Title Act 1994 (Qld), a person with an interest in the property (the caveatee) may lodge a notice which will get the caveator to commence legal proceedings within 14 days to establish the claim. If the caveator fails to comply with this time limit, the caveat lapses and may be removed from the register. Likewise, a caveatee may apply to the Supreme Court to have the caveat removed. Additionally, the parties may negotiate to cancel the caveat without involvement of the courts.
From the above discussion, it is clear that getting legal advice is important to dealing with a caveat or understanding the implications of lodgement. A solicitor may also be able to advise on seeking compensation where a person has improperly lodged a caveat and caused loss or damage.