A caveat is a statutory injunction, when lodged over the title to land serves as notice to those intending to acquire an interest in the land that someone is claiming an interest already. It preserves the status quo and acts to prevent any further dealings taking place in relation to the land (for example, the sale or transfer of ownership of a property).
Whilst it sounds straight forward, lodging a caveat is not without risk. If done in circumstances where you do not have what is known as a ‘caveatable interest’, it might see you caught up in expensive and distracting legal proceedings and liable for damages and legal costs to the owner of the property if they suffer damages as result of the caveat having been lodged.
When Will I have a ‘caveatable interest’ in land?
A caveatable interest means an estate or interest in land. The interest claimed must be of a type that has been recognised by the courts as capable of sustaining a caveat. It is not sufficient to simply be owed a debt, their must be a relationship between the debt and the land before you can lodge a caveat.
Lapsing of a Caveat
In Queensland, legislation (the Land Title Act 1994 (Qld)) imposes time limits on the duration of a caveat before which it will lapse.
Unless the person whose land is subject to the caveat sends a notice to the caveator requiring the caveator to start proceedings in a court to establish the interest claimed under the caveat, the caveat will lapse at the expiry of 3 months from the date of lodgement of the caveat if the caveator does not commence proceedings and provide notice of same to the registrar. If the caveatee sends the notice, the time to commence proceedings is reduced to 14 days from the date of service of the notice.
What Happens if Your Caveat Lapses?
Unfortunately, when your caveat lapses it is not as easy as just lodging another one on the same or substantially the same terms. Before doing so a court must make an order – that is known as giving leave – for the person to lodge a further caveat.
If it is that a caveat is found to have been lodged improperly, the caveator may be liable to pay to a person who has suffered loss and damage an amount of compensation. That compensation might be the loss of a sale, where a contract falls through due to the existence of a caveat, in circumstances where the lodgement of the caveat is found to have been improper or that there were insufficient grounds to lodge the caveat.
It is important to understand the risks associated with lodging a caveat before doing so. A caveat cannot be lodged without reasonable cause. If you need advice on whether a caveat is appropriate in your circumstances, please call Tracey for a confidential discussion.
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This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying the information contained in this update to specific issues or transactions. For more information or specific advice on your circumstances please contact firstname.lastname@example.org.