Lodging a caveat over real property is useful tool, but one fraught with danger.

To give context (as per J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546; BC7100480):

“In simple terms, the purpose of a caveat is to act as a type of injunction … to prevent registration of dealings and plans regarding the land until notice has been given to the caveator. This enables the caveator to pursue such remedies as may be available against the person lodging the dealing or plan for registration.”

It is crucial to remember that it’s important to lodge a caveat only in respect of a caveatable interest, since lodging a caveat that doesn’t protect a caveatable interest may give rise to a claim for compensation by a person who suffers loss as a result.

The caveator must have some legally recognised estate or interest in the land in question, such as a signed and dated lease in registrable form, a mortgage, an option to purchase land or a securable interest over goods attached to the land.

A recent NSW case highlighted this issue – Guirgis v JEA Developments Pty Ltd [2019] NSWSC 164.

In this decision, it was ordered that a caveat be removed on the basis that there was no caveatable interest.

The caveat was lodged by a wife on the basis of a “charge” by virtue of an “agreement” between the husband and wife arising due to an “outstanding loan.”

The husband made an urgent application to have the caveat removed, arguing there was no such loan agreement or other arrangement. The court accepted his argument and went on to noted deficiencies in the conduct of the conveyancer who lodged the caveat:

  • The facts on which the claim was based, such as the date of the agreement and whether it was oral or in writing, were not included
  • The conveyancer needs to do more than a casual or incomplete inquiry to be able to confirm that the caveator has a good and valid claim “to the best of their knowledge”.

While unclear in this case, there are significant penalties for lodging an improper caveat, including ot a third party who may undertake the lodgment.

Speak to a lawyer to ensure you are protected.

 

Precis: Lodging a caveat over real property is useful tool, but one fraught with danger. the purpose of a caveat is to act as a type of injunction … to prevent registration of dealings and plans regarding the land until notice has been given to the caveator. lodging a caveat that doesn’t protect a caveatable interest may give rise to a claim for compensation by a person who suffers loss as a result. A recent NSW case highlighted this issue – the caveat was lodged on the basis of a “charge” by virtue of an “agreement” between the husband and wife arising due to an “outstanding loan”. As the facts of any loan werre not clear, the wife’s caveat was not upheld, and the conveyancer was also liable (as they need to do more than a casual or incomplete inquiry). This is why it is crucial to see a lawyer, and why it is worth paying the premium for a lawyer over a conveyancer.