A Caveat is a legal document used to assert a person’s interest in a property. As a formal declaration of interest, a caveat can delay a property transaction and can even freeze the target real estate to prevent any sale that would harm the interest holder’s rights.

Basic requirements for a Caveat

Lodging a caveat requires meeting a number of basic legal requirements. These fall into three main categories: the statement of claim, the estate or interest, and the prohibition. Additional details include the caveator’s name and information about the property owner.

The function of a Caveat

A property caveat can be used to delay a property transaction. If there is a caveat on a property, any interested party must first prove to the court that they have the right to deal with the property before the transaction can proceed, which takes time to determine. In some cases, lodging a caveat is simply used to assert one’s interest to third parties. In these situations, the person who lodges the caveat is called the caveator.

Lodging a caveat before a property dispute arises is a necessary step to protect your interests. A Caveat may only be lodged by a person with a relevant interest, and the connection to the real estate must be one that is recognised by law. Lodging a caveat without a legitimate right can have serious legal consequences.

Scenario one

A property caveat (Property Caveat) can be used to protect your property interests in a family dispute arising from a relationship breakdown. If the family home is held solely in your spouse’s name, the relationship has broken down irretrievably, and you are concerned that your spouse may sell the property without your knowledge, you can lodge a caveat on the property to prevent this. Before doing so, you will need to demonstrate that you have a caveatable interest in the property. This can be established on a number of grounds, such as non-financial contributions to the family or joint responsibility for the mortgage.

Scenario two

If you have signed a contract to purchase a property and paid a deposit, this does not mean the purchase is guaranteed. Until settlement is complete, the owner may still sell the property to another buyer. As the purchaser, you can lodge a caveat on the property to notify others that a purchaser already has an interest in it, preventing the property from being sold privately to someone else. In this situation, a purchaser who lodges a caveat must complete the purchase, rather than simply lodging a caveat without proceeding with the transaction.

How to remove a caveat from a property

A caveat on a property can be removed through the appropriate legal steps.

One option is to lodge a written application with the Registrar of Titles. The application must be accompanied by a signed certification from a lawyer. The supporting document must state that the caveator is not the owner of the property or does not have a right to lodge a caveat. If, after this document is lodged, the Caveator does not apply to the court to uphold their claim, the caveat will lapse. If the caveator applies to the court, they will bear the entire burden of proof to establish the legitimacy of the rights they claim. If the court finds that the caveator has failed to prove the legitimacy of their lodgement, the court will remove the caveator from the property.

Final thoughts

The above is information about caveats in Australia. As an effective tool for protecting your legitimate interests, you can lodge a caveat early, before a dispute arises. If you have any questions about whether you have the right to lodge a caveat, or if you would like to lodge or remove one, please consult our experienced lawyers.