One of the more misunderstood features of Queensland’s title system are caveats. We often receive queries from clients asking whether they can register a caveat over the property of someone who owes them money. While caveats can be a useful tool to protect a party’s interest, we always urge caution when using them, as there can be serious consequences to lodging a caveat.
What is a caveat?
A caveat is a notice that sits on a property title that, once registered, generally prevents the registration of other instruments or documents on the title. In other words, a caveat prevents other dealings, such as sales or mortgages, being registered over property. There are strict requirements associated with caveats, and once registered a caveat will remain on a title until it is withdrawn, lapses or is cancelled.
The purposes of caveats is to allow time for a court to determine whether the caveator has an interest in the title.
Who can register a caveat?
Not just anyone can lawfully lodge a caveat. Among others, a person who claims an interest in a lot may lodge a caveat. The term interest is defined by legislation as meaning, in relation to land or other property:
- a legal or equitable estate in the land or other property; or
- a right, power or privilege over, or in relation to, the land or other property.
It is critical for a caveator to have an actual interest in the land or other property. A simple debt does not create an interest, unless there is an agreement that creates that interest (for example a ‘charging clause’).
Other circumstances that have been deemed to create an interest in a land or other property include:
- purchasers under a contract of sale have an equitable interest in the property;
- beneficiaries of trusts (including constructive or resulting trusts);
- mortgagees under unregistered mortgages.
We recently acted for a party who successfully claimed an interest and registered a caveat under the right of subrogation. In that matter our client had personally guaranteed monies secured by mortgage over a property and then personally paid out those monies. Under the right of subrogation our client was able to step into the shoes of the mortgagee and claim an interest in the property.
When does a caveat lapse?
Apart from caveats lodged with the consent of the registered owner, caveats lodged in Queensland will lapse unless the cavetor commences court proceedings to protect their caveatable interest:
- within three months of lodgment of the caveat; or
- within 14 days of lodgment of the caveat if a person affected by the caveat gives written notice requiring them to commence proceedings.
Once a caveat lapses, another caveat cannot be lodged on the same (or similar) grounds without obtaining leave of the court.
What happens if a caveat is lodged improperly?
A party who suffers loss or damage as a result of an improperly lodged caveat is entitled to seek compensation from the caveator. Affected parties could include the registered owner, a mortgagee or a buyer.
What should you do?
If you think that you have a caveatable interest in a property and wish to protect your rights, you should contact us to obtain appropriate advice. Conversely, if you are notified that a caveat has been registered over property owned by you, you should contact us to discuss the steps that you can take.
The consequences of improperly lodging a caveat, or failing to take steps to enforce a caveat, or of ignoring a caveat can be costly.
Our experienced commercial property lawyers team would be happy to discuss any queries or concerns that you have.
Contact us on (07) 5606 7332 to discuss this or any other matter.
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