We have all heard the phrase “proceed with caution” but in the legal world that caution often takes the form of a caveat.
A caveat is essentially a giant “heads-up” that protects your rights. This article attempts to clear up the confusing legal jargon to give you a quick, straightforward, guide on how caveats work and how they may impact you.
What is a caveat?
A caveat is an instrument lodged by a caveator registered on a Certificate of Title of a particular parcel of land.
The person who registers the caveat is known as the caveator. The caveator when registering the caveat over the property claims a caveatable interest in that land.
The purpose of the registering a caveat is to caution or provide a warning to any other parties, involved in any dealings with that parcel of land, that the caveator claims an interest as well.
There are different types of caveats. Depending on the type of caveat registered, a caveat will do one of the following:
- prevent the registration of any other instrument, for example a Transfer of Land or a Mortgage (known as an absolute caveat);
- allows for the registration of any other instrument but only subject to the Caveator’s claim (known as a subject to claim caveat); or
- allows the registration of any other instrument but only after the Caveator has been given notice (known as a notice caveat).
There are many different scenarios where a caveat might be registered on a property. Some examples include:
- an owner of a property may register a caveat over their own home to prevent improper dealing on their land;
- a tenant of a lease of the property may register a caveat to protect their tenancy;
- or someone who is entitled to receive a portion of the proceeds of sale may lodge a caveat to ensure they are paid out at settlement.
Arguably, the most common use of caveats is when a caveator is owed a debt, usually through a business.
In this scenario the lender would lodge a caveat on the borrower’s family home as security for the debt. There must be a contract that creates this right. This scenario is also where problems occur as many lenders are misinformed about the types of interests that are considered a “caveatable interest”.
Do I have a caveatable interest?
To have a “caveatable” interest you must have a claim to a legal or equitable interest in land.
Claiming that a person owes you money does not automatically mean you can register a caveat on their house and demand payment of your debt if they try to sell.
The interest or claim must be directly related to the land, or the owner of the land has to have expressly given the Caveator written consent to register a caveat on their land.
Caveatable interests include, but are not limited to, an interest:
- under an option to purchase;
- as a tenant of the land;
- as purchaser under an agreement for sale;
- as an equitable mortgagee; and
Interests that do not usually constitute a caveatable interest include, but are not limited to:
- an unsecured claim for a debt or for damages, including rights as a judgment creditor;
- a right of pre-emption to purchase, lease, or otherwise acquire an interest in the land;
- an interest as a builder under a construction contract in relation to the land. The exception to this would be the building contract grants the builder a charge over the land.
For a caveat to be successfully lodged, it must comply with the requirements specified under relevant legislation.
Interestingly, Landgate as the Western Australia land authority, will not assess the validity of a caveatable interest when a caveat is lodged.
Landgate will accept a caveat for registration so long as it is in the correct form and has the right supporting materials. This means a person may register a caveat even when they do not have a valid caveatable interest, so long as their form is correct.
This situation, if not informed correctly, does lead to serious consequences for the Caveator.
How can I remove a caveat?
The most common way to remove a caveat is by an application to Landgate for the removal of a caveat under section 138B of the Transfer of Land Act 1893 (“the Act”).
After the application has been lodged at Landgate, and that application has been accepted, Landgate will serve the caveator with a notice requiring that the caveator withdraw the caveat or obtain from the Supreme Court an order extending the operation of the caveat within 21 days.
If the caveator does not withdraw the caveat and fails to obtain a Court Order extending the operation of the caveat within the 21-day period, the caveat will lapse and be removed from the Certificate of Title.
Once a caveat has been removed under section 138B of the Act the caveator will not be able to re-lodge the caveat unless the caveator obtains leave of the Court or the consent of the registered proprietor.
Risk of registering a caveat without a reasonable cause?
Should the landowner make an application to remove the caveat, notice is provided to the caveator, and the caveator applies to the Supreme Court to extend the caveat, the Court may find that there is no caveatable interest in the land.
If the Court finds no caveatable interest, then the Court may determine that the caveat has been improperly entered without reasonable cause.
A caveat entered without reasonable cause can make the caveator liable for compensation and costs to the landowner under section 140 of the Act.
There are also risks involved for solicitors who assist with the improper entry of a caveat without reasonable cause, as costs orders can also be made against the solicitor personally.
How do I withdraw a caveat?
After a caveat has been lodged, the caveator can make an application to withdraw at any time.
In Western Australia, a withdrawal of caveat must be signed by the caveator.
If you have received notice that a caveat has been registered on your land, or you are seeking to lodge a caveat, or to extend the operation of a caveat, contact us at Lynn and Brown Lawyers to discuss your options.
By Bryce Blair and Steven Brown
This article has been authored by Bryce Blair. Bryce brings a diverse academic and professional background to his legal practice, with qualifications in law, history, and business. Admitted in both Western Australia and New Zealand, he works across Wills and Estates and Commercial Law, assisting clients with matters ranging from estate planning and deceased estates to contracts, business structuring, and dispute resolution. Bryce is passionate about providing clear, practical advice and helping clients feel supported and informed when navigating important personal and business decisions.
Outside of work, Bryce enjoys live sports, Jiu-Jitsu, reading, and spending quality time with family and friends.
