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A caveat is a formal registration of a legal or equitable interest in land. If you are the registered owner of a piece of land in New South Wales (NSW), you will know if a party has lodged a caveat on your land as the Registrar-General is required to send you written notice. Lodging a caveat can prevent further dealings with the property until it is removed. Therefore, in these circumstances, you may wish to remove a caveat. This article sets out the three key ways to remove a caveat in NSW, namely through:

  • formal withdrawal;
  • the caveat lapsing; or
  • a court order.

Formal Withdrawal

The formal withdrawal process requires the caveator to decide to withdraw their caveat. To do this, the caveator (or their solicitor) must complete and sign a withdrawal of caveat form (Form 08WX from the Land and Property Information Office) and lodge this together with the fee ($136.30 as of February 2017).

The following individuals can also apply to withdraw the caveat:

  • if joint tenants hold a caveat and one caveator dies, the surviving caveator;
  • the executor, administrator or trustee of a deceased caveator;
  • the Australian Securities and Investment Commission (ASIC); and
  • a trustee when the caveator is an infant or is deemed mentally incapable.

This process is only suitable where the caveator wishes to withdraw the caveat. Where the registered owner, or another party with a relevant interest, wish to remove the caveat, then the other methods set out below should be used.

Lapsing

You may also remove a caveat if it lapses. For example, this occurs when:

  • the caveator’s interest is satisfied because another party registered another dealing (e.g. if a caveator is an unregistered mortgagee, her interest in the property will be satisfied if the mortgage is discharged);
  • the registered owner or a party with registered interest lodges an application for preparation of lapsing notice; or
  • a party lodges a dealing that the caveat prevents together with an application for preparation of lapsing notice.

The registered property owner or another interested party may typically use an application for preparation of lapsing notice to remove the caveat where the caveator will not agree to withdraw formally. The property owner may wish to register another dealing on the land, which the caveat prevents, and seek to apply for the lapsing of the caveat. You must use the relevant LPI form (form 08LX). Once you have lodged the form, the caveat will lapse and expire after 21 days.

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Extending the Caveat

A caveator can apply to the Supreme Court of NSW seeking an order to extend the caveat. They must make the order and lodge it with the Registrar within 21 days from receiving the lapsing notice. A court will only honour a caveator’s order if the claim has ‘substance’. The caveator bears the onus of proof, and the court will evaluate whether the balance of convenience favours retaining the caveat.

In circumstances where the caveator is served with a lapsing notice and does not want their interest removed, then the caveator can also give written consent to extend the caveat. This written consent must include specific details, including:

  • the full name of the caveator and registered number of caveat;
  • type of dealing consented; and
  • caveator’s signature (or their solicitor).

The consent must be absolute without any conditions. Removing a caveat by lapsing is most appropriate where it is unlikely the caveator will fight back or commence proceedings, and will instead either consent or allow the caveat to lapse willingly. Alternatively, lapsing is the best option where you cannot locate the caveator, or they no longer exist (e.g. deregistered company).

Court Order

Lastly, a party can apply to the Supreme Court for an order to withdraw a caveat. The party must lodge the application with the court together with a request form (form 11R from LPI). This option is considered best if the need to remove the caveat is urgent, or where a party expects disagreement from the caveator. The caveator bears the burden to establish a caveatable interest and reasonable cause (i.e. an interest in the land).

What Happens If a Caveat is Lodged Incorrectly?

You can only lodge a caveat if you have a caveatable interest. Therefore, if you lodge a caveat without ‘reasonable cause’, this can be a serious matter. The court will consider whether you had an honest belief that you had such an interest, to determine if you had reasonable cause or not. Additionally, if the court finds that the caveat was lodged incorrectly, they will remove it from the Register. As well as this, they can also order you to compensate any person that suffered financial loss due to your incorrect caveat.

Key Takeaways

Deciding on the process to remove a caveat will depend on the circumstance of your case. As the registered proprietor of the land, you should keep in mind where:

  • the caveator no longer has an interest or wishes to withdraw, they can do so by a formal withdrawal;
  • you wish to remove the caveat and consider that there is unlikely to be a dispute, you should file an Application for Preparation of Lapsing Notice;
  • your circumstances are urgent, or you anticipate a fight, an application to the Supreme Court may be the best option.

Note: LegalVision does not assist with caveats. But we hope you find this article helpful!

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