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Caveats: Your Questions Answered

What is a Caveat?

In simple terms, a caveat is a legal notice that can be lodged with Land Registry Services and recorded on the title of a property to protect your interest in a property. It serves as a warning to others that you have an interest in the property and should be informed before any further actions are taken regarding the property.

Am I Eligible to Lodge a Caveat?

You are only eligible to lodge a caveat if you have a 'caveatable interest' in the property. This would include legal ownership, an equitable interest, a security or a charge over the property. It does not normally include mere unsecured debts. Caveats can also be lodged with the consent of the registered owner of the property. In the case of a caveat lodged with the consent of the owner, this should be expressed in clear terms and is normally contained in a clause in a written agreement. It should be noted that consent can be withdrawn by the owner after it has been given unless they have irrevocably consented to the lodgment of the caveat.

What is the Effect of Lodging a Caveat?

Lodging a caveat does not create an interest in the property but it can prevent certain transactions involving the property, like a sale or mortgage, taking place without your knowledge or consent. It also gives notice or warns other persons seeking to acquire an interest in the property of your interest, which can affect priorities, namely, the order in which secured creditors are paid in the event the property is to be sold.

Are there any Pitfalls to keep in mind?

Misusing a caveat or lodging one without proper legal basis or reasonable cause can lead to legal consequences and liabilities for damages. Lodging a caveat can also preempt litigation, which can be expensive and protracted.

How is a Caveat Lodged?

A caveat is normally lodged through PEXA, which is an electronic conveyancing platform, and you will need the assistance of a PEXA subscriber such as a lawyer to lodge the caveat.

How is a Caveat Removed?

A caveat can be removed by the person who lodged it, who is referred to as the 'Caveator'. Again, this is normally done through PEXA. In NSW, if the person who lodged it does not agree to remove the caveat voluntarily the owner of the property can apply to the Registrar General of Land Registry Services to issue a lapsing notice to the person who lodged the caveat. A lapsing notice will result in the caveat being removed from the title of the property after 21 days have elapsed. However, you should be aware that the Caveator can file an application with the Supreme Court of New South Wales seeking an order for an extension of the caveat. This will then result in litigation.

Should I seek Legal Advice?

The above information is general in nature. You should keep in mind that the legal processes with respect to caveats vary from one jurisdiction to another. This blog deals with caveats in NSW. Due to the serious implications that can flow from lodging, or seeking the removal of, a caveat, you should seek professional legal advice specific to your circumstances:

  • If you are considering lodging a caveat on a property;

  • If someone has lodged a caveat on your property and you are considering applying for a Lapsing Notice to be issued;

  • Before signing any document that might give someone the right to lodge a caveat on your property;

  • If you are involved in a dispute, or potential dispute, regarding a caveat; or

  • If you would like to review the terms and conditions of your business agreements to include a clause that would permit you to lodge a caveat on the property of persons who may owe you money.

If you would like help with any of the above, please feel free to contact our friendly staff to discuss how we may assist you with our services.


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