Challenging a Caveat in NSW?

27 Jul Challenging a Caveat in NSW?

What is a Caveat

The word caveat has its roots in Latin and approximately translates to “may he beware of”. It is a warning to those who wish to have a dealing in something that has been caveated. One of the most common forms of caveat is a caveat on property.

With respect to real property, a caveat is an instrument that records an interest in a land title. This interest is known as a “caveatable interest”. The caveat acts to protect the caveator (person or entity that lodged the caveat) against the owner of the property by preventing them from dealing with it, most commonly by selling the property or refinancing the property.

A caveat on a property ordinarily prevents the registration on that particular title of any other interest without the consent of the caveator.

Caveatable interest

In order to lodge a caveat, you must have a caveatable interest. If you do not have a caveatable interest recognisable by law then you will be liable for any loss suffered by the owner as a result of the caveat. One type of loss that could be suffered by the owner is the cost of going to Court to have the caveat removed. In this scenario, if a Court finds you do not have a caveatable interest then you will be liable to pay for the removal of the caveat along with the legal fees associated with that removal.

In order to place a caveat on a property you need a legal or equitable interest in a property. The caveatable interest must be sufficiently connected with the land, so if someone owes you money for an unpaid invoice for mechanical repairs you carried out, you cannot lodge a caveat on their property because there is no sufficient connection established.  Caveatable interests can come in a variety of ways, notably:

• Contracts for sale of land;
• Purchaser’s or vendors lien;
• A person’s contribution to the purchase price of a property;
• A contractual term that gives you the right to a caveatable interest;
• An equitable charge;
• A beneficiary’s interest under a trust; and
• A second mortgage’s interest in a property.

Challenging a caveat

A caveat can be withdrawn in generally three ways:

1. With the consent of the caveator;
2. You can serve a lapsing notice on the caveator in which case the caveat will be removed from the title within 2 days of service of the lapsing notice. It is then up to the caveator to make an application to the Court so set aside the lapsing notice; and
3. You can apply to the Supreme Court of NSW to have the caveat removed, however you must demonstrate with a legal basis that the caveat should be removed.

Unless you gain the consent of the caveator to remove the caveat, it is likely you will need specialised legal advice advising you of your position with respect to challenging a caveat.

Should you require assistance with your litigation matter, please give us a call for a free assessment. Our contact details are:

Berrigan Doube Lawyers

Melbourne:        (03) 9600 2577

Sydney:             (02) 9251 6699

Brisbane:           (07) 3229 0707