If you have a legitimate interest in a piece of land and don’t want its owner to sell it, you may wish to lodge a caveat on the land’s title. However, it is important to ensure that you fully understand what caveats are and when you can legally use them before you lodge one. Failing to ensure this could result in serious legal consequences. This article will set out:
- the general legal principles surrounding caveats;
- the types of situations where you can use a caveat; and
- what a caveatable interest is.
This guide will help you to understand your options when you purchase a business with leased premises.
What is a Caveat?
A caveat is a Latin word loosely meaning “warning”. When used in the legal context, it is commonly used to describe a formal warning placed on the title to land. The caveat serves as a warning to any other party searching the title of the land that the person who lodged the caveat on title (caveator) has an interest in the land. Subsequently, it prevents any further dealing with the land until the caveator or a court has removed it.
The removal of a caveat can only occur through:
- a court order;
- withdrawal by the caveator; or
- the caveat being lapsed by the owner of the property by a lapsing notice.
What is a Caveatable Interest?
It is important to note that a caveat cannot be lodged randomly by anyone. To lodge a caveat, you must have a “caveatable interest”. A caveatable interest arises where you have a legal or equitable interest in the land.
A legal interest arises where you have an enforceable right to the land.
An equitable interest arises where you have a right to an interest in the land.
An equitable right also arises for the beneficiary of a trust who is entitled to property.
Consequences of Not Having a Caveatable Interest
However, where there is no legal or equitable interest in the land, there may not be a caveatable interest.
You should be able to support a caveatable interest with documents, such as contracts and agreements. It also should be supported by facts, such as:
- dates of agreements; and
- records of conversations.
Lodging a caveat without a caveatable interest means that the owner of the land can apply to lapse the caveat. They can do this through a lapsing notice.
If you receive a lapsing notice, you have a specified amount of time to apply to court to justify why a caveat is required. Failure to provide such justification will result in the caveat lapsing. Further, if the court finds there was no such justification after a hearing, you could face having to pay the other party’s legal costs. Therefore, it is important to be clear about whether a caveatable interest exists.
I Have a Caveatable Interest, How Do I Lodge a Caveat?
The process of lodging a caveat varies from state to state around Australia, including:
However, most states require you to lodge a statutory declaration at your suitable land and title office. You will need to specify the:
- details of the land;
- owner of the land; and
- caveatable interest.
Given the seriousness of the caveat and the implications that you could face if there is no valid caveatable interest, you should always obtain legal advice before lodging a caveat to ensure an interest exists.
Key Takeaways
A caveat serves as a warning registered on a land title that a third party (the caveator) has a caveatable interest in the land. Each state and territory in Australia has different laws relating to lodging caveats on property.
Before lodging a caveat, it is important to ensure you have a caveatable interest on the land. Failure to take this step and confirm the viability of the caveat could result in the caveat being lapsed.
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