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Caveats

July 07, 2019 by admin

A caveat is a warning or caution derived from a Latin word “cavēre” which means “let him beware”. There are various interests that can be protected with a caveat. In this article we will take you through the definition of a real estate caveat, in particular, a caveat lodged by a buyer who has signed a contract of sale. We will also discuss the benefits of lodging a buyer’s caveat, the risks involved in not lodging a caveat and the ways to remove a caveat.

A caveat is a registration on title of property that claims an interest in the property. In the case of a buyer purchasing an interest in real estate, once a contract of sale has been exchanged, the buyer has a binding contract creates a caveatable interest in the property. The buyer does not become the legal owner of the property until the settlement of the purchase of property has been effected.

A caveat is a mechanism, which permits a person who claims an unregistered interest in the property to protect it. When a person has an unregistered interest in another person’s property, they can lodge a caveat on the title.

Benefits of lodging a buyer’s caveat

The caveat serves as a warning to the world that the person is claiming an unregistered interest in the property.

It directs the Registrar of Titles not to register any dealing with the property, which is inconsistent with the interest claimed, without notice being given to the person who lodged the caveat (i.e., the caveator).

Consequences/ Risks of not lodging a buyer’s caveat

If a caveat is not lodged immediately by the buyer, their interest in the property is at risk. It is possible that another caveat with similar interest as that of a buyer is lodged which would gain priority ahead of the buyer and may also result in the buyer’s caveat if lodged at a later point of time being rejected as being contrary to the first caveator’s interest, if indeed two caveats have been lodged claiming the same interest in the property.

Any such dispute may delay the settlement and the buyer may incur significant time delays and expense in ensuring that the first caveator’s interest in the property is dealt with and eventually disposed of if the buyer had in fact a stronger claim/ interest in the property.

Removal of caveat

A buyer’s caveat will lapse at settlement of the property when the caveator becomes the registered proprietor of the property. In Victoria, there are two methods under Transfer of Land Act 1958 (Vic) for removal of caveats which are stated as below:

Section 89A of the Transfer of Land Act 1958 (Vic) provides a provision where an application can be made to the Registrar of Titles accompanied with a legal practitioner’s certificate substantiating that the caveator does not have the estate or interest claimed in the property.

Section 90(3) of the Transfer of Land Act 1958 (Vic) provides a provision where an application can be made to the Supreme Court of Victoria to have the caveat removed.

For further information please contact:

Mark White/ Gessica Giordano/ Vridhika Mayar

+61 3 9088 0488

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