Purchasing a property is a major investment. Understanding legal documents and regulations is vital to safeguarding yourself, your interests, and your investments. This is why understanding what is a caveat on a property is important.
What is Property Caveat?
Caveats on a property act like a “stop” sign to show someone else besides the owner has a stake in the property. In other words, it means that a legal hold or freeze is placed on a property, restricting the owner from certain property dealing. However, “an interest” is not as simple as having “an interest,” because that doesn’t mean you can put or ask for a caveat on the property. There are some rules to follow when it comes to placing a caveat on a property.
A caveat on the property is not easily withdrawn. Here is how it can be withdrawn:
- Order of court,
- Lapse of the caveat,
- Withdrawal (here you have to lodge a withdrawal of caveat by the caveator, or their lawyer, or is ordered by the Supreme Court), and/ or
- Obtaining the caveator’s consent.
Although the definition of the term is the same everywhere, the rules are different. Different states have different regulations. For example, the laws for caveats on property in Victoria are different from the laws in New South Wales, and so on. Getting legal help when you’re looking to apply for a caveat is important because it keeps you safe and informed.
Caveats Explained: What Do You Need to Know?
Here are a few reasons to put a caveat on property:
- A tenant who is under an unregistered lease,
- A person who has an equitable interest in the property or land under a contract of sale,
- A tenant under a lease,
- A seller who has received some cash, or installments of the purchase price but is no longer the registered owner,
- A second purchaser who has signed the contract to buy the property,
- A person who has the right to access the land or the property due to an easement (unregistered),
- An ex-partner of the owner,
- A victim of fraud,
- The beneficiary of a trust or
- An equitable mortgagee.
Remember, only a person with “caveatable” interest can lodge a caveat. If a person who does not have a legible claim to the property lodges a caveat, they may be liable to pay compensation to the owner or whoever stands to suffer a pecuniary loss as a result of such application. Once a caveat is lodged, it must be removed for further dealings. If it is lodged by someone who does not have a claim or right to the property, it will be difficult for the owner and can lead to legal action and financial penalties. Hence, it is recommended that you always get legal help and advice before you lodge a caveat.
Property Caveats: Benefits, Uses and More
Benefits of Property Caveats
- It protects the property owners. Unlike priority notices, a caveat on the property remains until it lapses. Also, it can only be removed by court order or when there is an interest in another plan or dealing.
- It offers protection to property buyers in long settlements because it records interest in the property’s title before it is transferred to them.
- It also acts as an extra layer of protection against fraud.
Caveats on Property and its Common Uses
- Used as protection against incoming interest or dealing by other parties.
- Helps you protect your or the buyer’s interest under a contract for sale.
- Registration of a delimitation plan.
- Helps you secure a loan. A bank or lender can lodge a caveat to let others know of the financial interest of the property.
Lodging a Caveat on Property: How to Put a Caveat on a Property?
Step 1: Find a good Solicitor or Conveyancer
Always start with finding a good advisor or help. A lawyer or property expert knows this area well and will lead you through it. They’ll also make sure you complete the form smoothly. If y0u’re confused to choose between a conveyancer or solicitor, read our article that can help you out.
Step 2: Fill out the Form
Make sure that when your legal advisor is filling out the form, all the details are factually correct and provided to them. Your advisor will charge a fee, ensuring that it is paid in full.
Step 3: Wait for Approval
Once you lodge a caveat to property with the legal entity of your area, the register will be updated and the information will be reviewed. Every detail, such as any instrument, or facts to support your claim to the property will be uploaded, those will be reviewed. Once the authorities are satisfied, they will approve it.
Are There Any Risks to Lodging a Caveat?
A warning note matters a lot for both those who want to buy and those who want to sell. But this is true only when both sides want to deal with the property in question. The interest in the property must be a valid claim. That said, there are a few risks of not lodging a caveat:
- Whoever lodges the caveat on property stands to claim it. For example, if there are two buyers, both of them are interested in buying. But if one of them lodges the caveat to the property first, then the seller will have to sell the property to the buyer who lodged the caveat. So, lodging a caveat is important to claim ownership.
- If a property owner owes a creditor money over the property or it is mortgaged, the lender can lodge a caveat on the property to stop the owner from selling the property. This is usually done to protect the interests of the creditor.
- If you’re buying a property with the help of a loan or mortgage, the registration of the title may take a while and it can open a window of opportunity for others to register their claim against your property. To mitigate this, ensure that the caveat of the property is lodged in due time.
And that brings us to the question of, when should a caveat be lodged? By a general rule of thumb, you should lodge a caveat on the property immediately. The cost of a caveat on property, compared to the investment in the property is pretty low, so why wait?
Caveat to Property: Get the Help You Need With Easy Link Conveyancing
Buying a property is not an easy task. There are multiple facets to purchasing and registering a property in your name. The process of which may be complicated. After all, not everyone is well-versed with the legalities of everything. This is why you need the help of Easy Link Conveyancers. From answering your questions about who can put a caveat on a property in Victoria to helping you apply a caveat, they help you with everything.
Easy Link Conveyancers are well-equipped to deal with every aspect of selling and buying properties, which is why they can help you with the process. Additionally, different states have different rules. Experts like Easy Link Conveyancers can help you fill out the forms, add factual information and help you understand the rules for caveats on property in NSW or any other region in the country.
Whether you’re buying property or transferring your property, Easy Link Conveyancing will be your support. Ensuring that everything is filed properly and you have knowledge of the rules, you are sure to find reliable advice. You can get in touch with their team of experts by giving a call at 1800 327 954.