A caveat on your property can delay a sale, refinance or transfer, but it does not prove the caveator owns an interest. We explain the options for having a caveat withdrawn, lapsed or removed.
Discovering a caveat on your property can be alarming, particularly if you are about to sell, refinance or transfer the property.
A caveat does not necessarily mean the person who lodged it actually owns part of your property.
It means they claim a legal or equitable interest in the land and have recorded that claim on the title.
If you believe the caveat has no proper legal basis, there are several ways it may be removed.
Which option is appropriate depends on the interest claimed, how urgently the caveat needs to be dealt with and whether the caveator is willing to withdraw it voluntarily.
A caveat is recorded on the title of a property to protect a claimed legal or equitable estate or interest.
Section 74F of the Real Property Act 1900 (NSW) permits a person claiming such an interest to lodge a caveat.
Depending on its terms, the caveat may prevent certain dealings from being registered.
This can create an immediate problem if you are trying to:
The first step is to obtain a copy of the caveat and determine exactly what interest is claimed.
Not in the sense of finally determining the underlying ownership dispute.
The registration of the caveat does not establish that the caveator actually owns the interest claimed.
That issue may need to be resolved between the parties or by a court.
Accordingly, the existence of a caveat should not be treated as proof that the claim is legally valid.
The caveat should identify:
This information needs to be assessed against the actual circumstances.
For example, the caveator may say they have an interest arising from:
The question is whether those facts are capable of supporting the interest claimed.
The simplest solution is often to seek voluntary withdrawal.
If the caveator accepts that the interest has been satisfied, no longer exists or was incorrectly claimed, a Withdrawal of Caveat can be lodged.
NSW Land Registry Services recognises the Withdrawal of Caveat as the dealing used to remove a caveat from title.
This may occur, for example, where:
Where the caveator refuses to withdraw the caveat, further steps may be required.
A registered proprietor can apply to NSW Land Registry Services for the issue of a lapsing notice under section 74J of the Real Property Act.
The notice is then served on the caveator.
Once served, the caveator generally has 21 days to:
If the caveator does not do so, and the statutory requirements are met, the caveat can lapse.
NSW Land Registry Services also confirms the 21-day statutory period for a lapsing notice served personally.
No.
Serving a lapsing notice starts a process.
It gives the caveator an opportunity to apply to the Supreme Court and argue that the caveat should remain in place.
If the caveator does nothing within the required period and the procedural requirements have been satisfied, the caveat can lapse.
If they commence Supreme Court proceedings, the dispute may need to be determined by the Court.
Section 74K of the Real Property Act gives the Supreme Court power to extend the operation of a caveat.
The caveator will generally need to establish a sufficient basis for maintaining the caveat pending determination of the underlying claim.
The property owner can oppose the application.
Depending on the circumstances, the Court may:
Once a lapsing notice has been served, the timetable can move quickly.
Yes.
The Real Property Act also permits a person who is or claims to be entitled to an estate or interest in the land to apply to the Supreme Court for an order requiring withdrawal of a caveat.
This is provided for by section 74MA.
A direct Supreme Court application may be considered where:
The appropriate procedure depends on the circumstances.
Act quickly.
A caveat can interfere with registration of a transfer or other dealing, depending on its terms.
For example, NSW Land Registry Services notes that a standard caveat can prevent registration of a transfer without monetary consideration, which may be relevant to some family law property transfers.
If settlement is approaching, your solicitor will need to determine:
Do not wait until the day before settlement to investigate the issue.
Sometimes.
Depending on the caveat and the proposed dealing, the caveator may be able to consent to registration of a particular transaction while leaving the caveat otherwise in place.
This can occasionally provide a practical solution where the parties agree that one dealing should proceed but the underlying dispute remains unresolved.
The effect depends on the wording of the caveat and the transaction involved.
This needs careful analysis.
A former spouse or de facto partner does not automatically have a caveatable interest merely because there is an unresolved family law property settlement.
They must still identify a legal or equitable interest in the particular land capable of supporting the caveat.
At the same time, family law proceedings may give rise to separate court orders affecting the property.
The Federal Circuit and Family Court can make financial and property orders and interlocutory injunctions, including orders restraining dealings with assets.
If both Family Court proceedings and a caveat are involved, the two issues need to be considered together.
This can arise where property is required to be transferred from one former spouse to the other under:
A caveat may affect registration of the transfer depending on its terms.
The fact that the Family Court has ordered a transfer does not necessarily mean an unrelated caveat can simply be ignored.
The caveat may need to be:
NSW Land Registry Services specifically provides for transfers pursuant to Family Court orders within its transfer requirements.
This is one reason property transfer implementation should be dealt with early after family law orders are made.
Potentially.
Section 74P of the Real Property Act provides that a person who, without reasonable cause, lodges a caveat or refuses or fails to withdraw it after being requested to do so may be liable to compensate someone who suffers financial loss attributable to that conduct.
Potential loss might include loss arising from:
Compensation is not automatic.
The circumstances surrounding the lodgment and the caveator's basis for claiming the interest need to be examined.
The Act restricts repeated caveats based on the same facts after an earlier caveat has lapsed or been withdrawn in specified circumstances.
Under section 74O, a further caveat based on the same facts may have no effect unless the Supreme Court gives leave or the registered proprietor consents.
This prevents the caveat system from simply being used repeatedly to frustrate dealings with the property after an earlier caveat has been defeated.
Not always.
Before doing so, it may be sensible to assess:
A lapsing notice can force the issue quickly.
That can be useful, but it can also accelerate the matter into urgent Supreme Court litigation.
If a caveat has been lodged against your property, obtain:
The legal advice will depend heavily on the interest the caveator says they hold.
A caveat on your title does not mean the caveator's claim is necessarily valid.
But it should not be ignored.
Depending on the circumstances, you may be able to negotiate a voluntary withdrawal, apply for a lapsing notice or seek orders from the Supreme Court requiring the caveat to be removed.
If a sale, refinance or family law property transfer is approaching, timing becomes critical.
Urban Law Group advises property owners about removing caveats, lapsing notices, disputed equitable interests and caveats affecting sales, refinancing and transfers pursuant to family law orders.
This article was authored by Urban Law Group property lawyer Charlie Pollock. Charlie regularly presents to the local community, mortgage brokers and real estate agents on property law issues, helping explain the practical legal issues that arise in property transactions, ownership and transfers.