Removing Caveats

What is a caveat?

In simple terms a caveat is a notice lodged over land which will prevent certain dealings with the property. A caveat is a notice and not, of itself, an interest in the property.

Caveats can be lawfully registered for a variety of reasons if the caveator can establish a proprietary interest in the property. It is also possible for someone to lodge a caveat against a property either accidentally or unlawfully.

What can you do if you find a caveat lodged on your property?

The Land Titles Act allows a caveatee (typically an owner of land) to serve a notice on the caveator requiring them to commence legal proceedings within 14 days to show cause why the caveat should remain on the title, failing which the caveat shall lapse. If proceedings are commenced however the caveat will remain until those proceedings are determined.

This is all well and good but what happens if you aren’t able to identify who lodged the caveat? Section 127 of the Act allows any caveatee to apply to the Supreme Court for the removal of a caveat. This happened recently in the case of JTG & Partners Pty Ltd -v- The Trustee for the Exit Clean Trust when it appears an unknown caveator fraudulently lodged a caveat to thwart the sale of a boarding house.

JTG had entered a contract to sell a boarding house. On the day of settlement, the purchaser’s solicitors carried out a title search which revealed a caveat over the title. JTG’s sole director had no knowledge of the caveat. The purchaser refused to settle the contract on the basis that JTG could not produce clear title.

JTG promptly applied to have the caveat removed. At an urgent hearing by the Supreme Court, the court heard the following submissions:

1. The caveator appeared to be a non-existent entity. The lodger of the caveat, who had paid the lodgement fees at the Titles Office in cash (making identification of the lodger impossible) had not disclosed in the caveat the name of the alleged “Trustee”.

2. The caveator had nominated in its caveat an address for service of documents upon it, but when JTG’s solicitors wrote to that address the recipient at that address responded that he had never heard of the alleged caveator.

3. The real estate agent involved in the sale swore an affidavit describing an unusual conversation with the purchaser, who was having difficulty securing finance for the purchase, in which the purchaser said he knew someone who’d told him about how caveats could be used to cause all sorts of problems.

4. The caveator did not appear at the hearing despite having been sent copies of all relevant court documents.

The court ordered that the caveat be removed. This was not an easy decision for the court to make, given the possibility that the caveat was lodged legitimately. However, in all the circumstances it appeared to be the appropriate decision.

The removal of the caveat, effected by the Titles Office pursuant to the court’s order then enabled JTG to produce clear title to a different buyer who had been waiting in the wings.