A caveat is a formal notice or warning lodged against the title of a property, which stops any person including the registered proprietor (owner) from dealing with the property. In Western Australia, caveats are governed by the Transfer of Land Act 1893 (WA).
The purpose of a caveat is to preserve and protect the rights of the caveator (the person lodging the caveat). The effect of a caveat is that any person intending to deal with the property against which a caveat has been lodged will be unable to do so without first notifying the caveator.
Any person claiming an estate or interest in land can lodge a caveat. The following interests are typical examples of interests which will support lodgement of a caveat:
- Purchaser under a contract for sale of land.
- Grantee of an option to purchase land.
- Tenant of the land.
- Mortgagee or equitable mortgagee.
- Chargee of the land.
- Holder of an unregistered instrument in relation to the land.
- Party benefitted by an easement or restrictive covenant in relation to the land.
An owner of land may lodge a caveat against his own land:
- to protect his/her interest in the land. This is called a registered proprietor’s caveat; or
- to prevent improper dealings in land.
There are certain interests that will not constitute a caveatable interest. A caveat must relate directly to an existing, identifiable interest.
Does a debt allow you to lodge a caveat and in what circumstances?
A question commonly asked in relation to caveats is under what circumstances a caveat can be lodged for non-payment of a debt.
In order to be able to lodge a caveat for non-payment of a debt the owner of the land must consent to a charge over the land as security for the payment of the debt. The consent is usually in the form of a charging clause in the debt or security agreement.
A debt arising from a loan given to the owner of the land for the purchase of the land or improvements to the land may give rise to a caveatable interest and allow for the lodgement of a caveat.
What happens if you improperly lodge a caveat?
It is important to note that the acceptance of a caveat at lodgement does not mean the caveat is valid. Landgate (the land titles authority in Western Australia) will generally accept and process a caveat if it is in the correct form and properly describes the interest being claimed.
In the event a caveator lodges a caveat and does not in fact have a caveatable interest, they can be ordered to pay compensation for damage to the registered proprietor.
How is a caveat withdrawn?
There are a number of ways a caveat can be withdrawn ranging from a simple withdrawal to an order of the court. Two of the most commonly used methods for withdrawing a caveat are:
- Withdrawal of caveat document – used to remove standard caveats where the person who lodged the caveat (caveator) is available to sign the withdrawal.
- Application for the lapsing of the caveat – also known as a 21 day notice. This is commonly used where the caveator cannot be located and gives the caveator 21 days within which to obtain a Supreme Court order substantiating the caveat, failing which it will lapse.
If you are considering lodging a caveat but don’t know whether you have a caveatable interest or if you need assistance in removing a caveat, our experienced Perth lawyers can assist you.
Contact our team for more information.