Why Should I Lodge a Caveat

Section 89 of the Transfer of Land Act allows a person claiming any estate or interest in land, to lodge a caveat on the title. But what does this mean?

In this context, a Caveat is a restriction upon the sale of the property. It is a written notification telling us that someone has a legal interest on the property, who may have a priority over the legal rights of anyone else looking at becoming the owners of that property.

The case of Black v Garnock is an example of the risks involved in NOT lodging a Caveat. Garnock agreed to buy a farm for $1 million. A deposit of $100 000 was made and contracts were exchanged. Settlement was to take place on August 24, 2005 at 11am.

What Garnock did not know was the vendor owed close to a quarter million dollars to its firm of accountants.

A day before settlement, the accountants took out a writ of execution in the District Court, and the Sheriff was instructed to seize and sell the property to pay money owed to the creditors. The writ also stopped the buyer from registering the Transfer of Property.

More information about this case can be found online, however suffice to say, the buyer’s creditor checked the title search at 9am on the day of settlement and found nothing wrong. It was only later in the day that the writ was enforced. Garnock could not get his transfer registered.

The registered mortgagees were paid out, and what was left went to Garnocks vendor. The accountants would not take their writ off the land until they too were paid by Garnock.

If a Caveat had been in place for Garnock, they would have been protected from their vendor’s debt.

There are other reasons a Caveat can be lodged, other than the purchase of a property. They include:

  • An estate for life
  • A Leasehold estate
  • Interest as a charge
  • Interest as a lessee (tenant)
  • An interest under an option to purchase

You need to keep in mind that often it is wise to lodge a Caveat. The cost of one is minimal compared to the cost if something goes awry.

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