What is a caveat? Do I need one? 

What is a caveat? 

Under Section 89 of the Transfer of Land Act 1958, a caveat is a legal notice which can prevent any dealings with a property, such as the transfer of the land title, without the consent of the caveat holder. When a caveat is registered it will appear on a property’s title unless withdrawn by permission of the caveator.  

When you purchase a property, you may want to lodge a caveat to protect your interest in a property.  Additionally, if you are about to purchase a property and there is already a caveat on the title, this is a flag to investigate why there is a caveat registered, and to ensure the caveat will be removed before your settlement. 

Lodging a caveat does not mean the caveator is the new registered owner of the property. It is merely a notice to prevent the property owner from transferring or selling the property without notice or consent from the caveator. 

Do I have the right to lodge a caveat? 

Yes, if you have a caveatable interest and there are no special conditions forbidding you from lodging a caveat.   

There are several potential caveatable interests under the law. The most common interest being an ‘equitable owner of a property’. In other words, a purchaser who has signed a fully executed contract of sale for a home acquires a caveatable interest under the contract of sale.   

However, if you are the purchaser of an off-the-plan property there will often be a special condition in place to prevent purchasers from lodging a caveat on the title. This is usually to avoid delays in land subdivision and development. Penalties may be incurred to the purchaser if the condition is breached. When there is a registered caveat on a title, the Land Title Office cannot process the registration for the subdivision unless the caveator provides a letter of consent. Could you imagine the number of consent letters the vendor would need to obtain if every purchaser had lodged a caveat on the property? 

Additionally, under the Transfer of Land Act 1958 any person lodging a caveat without a caveatable interest is liable for damages and compensation caused by the caveat lodgement.  

Why should I lodge a caveat? 

Lodging a caveat on a title can help prevent a seller from selling the property to another purchaser before settlement. It can also decrease the risk of a third party interfering with a property transaction. For example, a creditor lodging a caveat before you will take priority over you as the purchaser.

When a purchaser’s caveat is lodged, this can also minimise the risk of delaying settlement, as a delayed settlement would incur additional costs. 

Differences between Australian states

Application processes and requirements vary between states. Click on the articles below for more information on caveats in your state.

W Legal Group can help!

Contact W Legal Group and we can help lodge the caveat for you, and answer any question regarding your next property transaction.

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