Preparation of Caveats

Do you have a proprietary interest in a piece of property not yet registered in your name?

A caveat is a form of statutory injunction placed on a piece of real estate effectively tagging that someone has a proprietary interest in the property besides the registered landowner. Lodging a caveat will prevent the registered owner from performing certain actions to do with the property without the caveator’s approval. The most common reason for lodging a caveat is at the point of purchase, ensuring that your interests are protected while you wait for NSW’s Government Land & Property Information to register your ownership in the property,

When should I consider lodging a caveat?

It’s important that you never lodge a caveat without viable cause. You may consider lodging a caveat if you have an estate or interest in land that you can’t protect by registration. When you sign a contract to purchase a piece of property you gain a “caveatable interest” in that property. This gives you the right to register a caveat with the LPI to protect your interest until title is registered in your name. There are other reason why a person would acquire a “caveatable interest” in a property, including:

When more than one person has signed a contract to purchase the same property. Occasionally two agents will sell the same property to different purchasers by error. The first to lodge a caveat will be awarded priority as purchaser, whereas the other may have a right to some compensation for the inconvenience.
A creditor wanting to prevent the owner from selling or dispensing of the property. A creditor can enter into a written agreement with the vendor of a property permitting the creditor to secure a caveat to secure a loan. Alternatively, the creditor may attain a court order to secure their right to lodge a caveat.
Other rights. There are a number of other instances in which an individual would acquire the right to tag a property with a caveat. It’s best to discuss this with an estate and property lawyer in order to prevent facing indemnity costs.

Should I lodge a caveat by myself?

Any person with a reasonable caveatable interest is entitled to lodge a caveat. However, it is best to employee an experienced conevyancing and estate lawyer to establish that a caveatable interest actually exists. Persons who have lodged caveats over property in which they have no caveatable interest may face indemnity costs even if the caveat is subsequently voluntarily withdrawn.

Some final facts about caveats

The caveat process can be difficult to understand. However, the following four points are the crucial starting point for anyone considering the lodgement of a caveat:

  • A caveat should be lodged as soon as caveatable interest has been acquired.
  • This is most often at the point that your offer to purchase a property has been accepted by the vendor.
  • Failing to do so could leave you subject to the risk of another party attempting to register their own interest in the property.
  • The Land and Property Information have the right to deny a caveat for multiple reasons including the incorrect lodgement of a form and a lack of reasonable interest. An experienced property and estate lawyer will be able to advise you as to the nature of your interest in a piece of real estate.