28 Oct What is a caveat? – Garth Brown
Can you lodge a caveat over the property of someone who owes you money? When can a caveat be laid and what can you do if someone slaps one on your property? In today’s show we talk to Garth Brown from Brown & Brown Conveyances.
Transcript:
Kevin: An interesting question was posed about caveats that I wanted to cover as someone was just asking what are the circumstances around someone putting a caveat on your property or, in fact, you putting a caveat on someone else’s property? What does it really mean?
I have to say up front, our program does go right around Australia, and state to state, it does vary, so we’d always suggest that you check with your state expert. At the end of this podcast, the text version will give you the state links for each of the state authorities.
Our go-to man is Garth Brown from Brown & Brown Conveyances, and he joins me.
Hi, Garth.
Garth: Hi, Kevin.
Kevin: Garth, what is a caveat?
Garth: A caveat is like an injunction on title. It actually freezes the title so that no one can deal with that title – not even the vendor or purchaser – without the consent from the person who placed the caveat on title. This is really an external third party controlling the title.
Kevin: When can you lodge a caveat?
Garth: You can lodge a caveat if you have what’s known as a caveatable interest or an equitable interest or a legal interest in property. I know those are convoluted terms there. It’s when you have exchanged contracts, the purchaser can place a caveat on the title.
Kevin: You have to have an interest in the property. Is that the barometer?
Garth: Yes, an interest in the property, whether a legal or equitable. You have an equitable interest once you sign a contract in exchange as a purchaser, and the mortgagee, anyone who’s lending money to help someone to buy a property.
Interestingly, there are agreements, though, that can occur between vendors and purchasers when it comes to agreements for supply of goods or services. The vendor can agree with someone who’s supplying some sort of service that the security of their charges – and it has to be in the agreement – is secured, and the security is the actual property itself. It’s whereby the vendor agrees that any liabilities are secured in their agreement via a caveat on title. That is allowable.
Kevin: Why would you want to put a caveat on a property? What are the circumstances? Is it to freeze the interest?
Garth: Yes, just to freeze it.
Kevin: That freezes your interest in it, Garth, is that correct?
Garth: That’s right. Some people have tried it where someone has done some tiling work or work on someone’s home. The vendor has refused to pay their account or some sort of work on their home, so what they’ve done is just gone and lodged a caveat on title.
Kevin: Can you do that?
Garth: No. You can do it, but legally it won’t stand up. It’s just really to bluff or shock the vendor to pay up.
Kevin: In the event that someone has actually put a caveat over my property, what do I do?
Garth: What would happen then is that the lands office would office a notice to you, as the owner, that a caveat has been put on your title so that you’re aware of what’s going on with your title. Then what you can do is apply for a lapsing notice. That’s where you fill in the forms and send it back to the lands office, and then that puts it back on to the person who actually put the caveat on title, who has 21 days to go to the Supreme Court to extend the length of time of that caveat.
Kevin: You really have to take action fairly quickly. You’re saying within 21 days of being notified.
Garth: Virtually, I would say within the first week. Get on to it straightaway so that you can get it off title.
Kevin: If I were going to auction, as an example, and someone put a caveat on my property, would that actually stop the auction from happening?
Garth: It could, actually. Potentially, it could. In that situation, you’d put a special condition into the contract that the successful purchaser would have the right to rescind if the caveat was delaying settlement.
Kevin: Any settlement would be subject to that caveat being lifted anyway, I’d imagine.
Garth: Definitely. You’d want to have that in writing.
Kevin: You still go ahead with the auction, but obviously, it’s going to cause a few bumps in the road, that’s for sure.
Garth: Definitely, yes. You need to be aware of it, have special conditions to protect you, so you can get out of the contract if you can’t complete because of the caveat. There’s another approach where you can go straight to the court directly and request for the caveat to be deleted, and avoid the lapsing 21-day lapsing notice. It takes maybe a bit of time and money, but it probably would be the quickest way in order to get a settlement across the line.
Kevin: Okay. As I said at the opening, there’s different legislation in different states. I suggest you go to the text version of this interview and check out the governing bodies behind caveats in Australia in these states and territories.
Garth Brown from Brown & Brown Conveyances. Thanks for your time, Garth.
Garth: Thanks, Kevin. Appreciate it.
No Comments