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Something fishy? Consider a caveat

In NSW land ownership is predominantly based on the Torrens title system of ownership by registration. In effect this means that if you are registered as the owner on the certificate of title, you have absolute proof that you own the property. However, there are instances where you may have an interest in a piece of land which does not provide you with ownership but you still need some protection. For example, you may have a lease of a property which is not registered on the title or an option to purchase a property which needs to be protected (i.e. you don’t want the person who granted you the option to sell the property to someone else).

The way you can protect such interests is by the lodgement of a caveat on the title to the property. A caveat in effects freezes the title and without the consent of the Caveator (the person who has lodged the caveat) transfer of the property is not possible. As such it is imperative that if you have a caveatable interest in a property, that you go to the effort to lodge a caveat to protect your interests.

That said, it is mandatory that you are satisfied that you have a caveatable interest as there are significant consequences if you have wrongfully lodged a caveat on the title to a property i.e. non-caveatable interests.

As an example, if you have lost your certificate of title and you fear that someone may improperly deal with or transfer your property you should immediately arrange for a caveat to be placed on the title to ensure that no one is able to transfer (fraudulently or otherwise) the title without your knowledge. This should provide you with plenty of time to arrange a new certificate of title and cancellation of the old one.

Other caveatable interests include (but are not limited to):

  1. interest as a chargee or mortgagee;
  2. interest as a lessee; and
  3. an easement.

As part of the conveyancing process, on settlement, your lawyer will ensure that there are no caveats on the title to the property or will otherwise be provided with a registrable withdrawal of caveat form. Without such a form, it would be very unwise to proceed as a purchaser as you may have significant issues transferring the title to your own name. The standard form contract used for most property transactions and conveyancing processes in NSW has provisions relating to the withdrawal of caveats on settlement.

If you have any queries about the ability to protect an interest in land by means of a caveat, please do not hesitate to call one of the property law experts here at ClickLaw to discuss.

John Kettle

ClickLaw Australia