The fact that a debtor who owes you money owns land is a good thing but beware of lodging a caveat when you’re not entitled to do so. A simple debt does not constitute a ‘caveatable interest‘ in land.
The main situation where a caveat is apt arises when there is a contract to sell land. Before the contract settles, it is prudent and appropriate for the purchaser to caveat the interest in the land that arises from the contract. It can also act to ‘freeze’ the ability of the vendor to sell the land elsewhere if, for example, there is a dispute about the validity of the contract.
A caveat on land is a form of registration on the land title that there cannot be dealings in the land without notice to the caveator.
If you lodge a caveat (you are the ‘caveator’) on someone’s title but you don’t actually have a proper basis for this, there are several risks that arise.
The land owner may apply to the Lands Titles Office for removal of the caveat, in which case, you will receive notice that the caveat will be removed within 21 days unless you urgently file an application to the Supreme or District Court to extend the caveat.
Alternatively, the land owner may go straight to Court for a ruling on the validity of the caveat. In both scenarios, you may be dragged into a substantial and costly legal battle.
If the Court finds against you, you may be liable for costs of removing the caveat and also have to pay compensation to the landowner and even another party with a proper interest in the land.
It is therefore not only prudent but vital to seek legal advice before putting a caveat on a land title.
For further information please contact Peter on 8362 6400 or email Peter Jakobsen. Join our mailing list to receive updates and advice on current issues.
