CAVEATS: HOW TO PROTECT YOUR INTEREST OVER HOUSE AND LAND
August 28, 2016
It’s the caveat.
It may be uncommon to use a caveat, but it still helps to know a little bit about it because you never know when it may become your best friend.
What is a caveat?
The word “caveat” is Latin for “beware.” In other words, a caveat serves as a warning.
In real estate, a caveat can be registered over a piece of land to warn others that the person who has lodged the caveat (the caveator) has an interest in the land. While there is a caveat registered on its title, the property cannot be sold or transferred.
It’s a way of protecting an interest in the short term, until the caveator can resolve the matter. For example by having their interest registered or until a court of law decides what should be done.
When can a caveat be lodged?
A caveat can only be lodged for interests that are connected to the land.
For example, the property may be part of a deceased estate. The deceased person left the entire estate to two of his adult children and nothing to the third child. The third child lodges a caveat over the property to register her interest in it and to prevent the house from being sold without her legal claim first being resolved.
Another example is a couple who bought a house together but never married. The house is in the female partner’s name only. They separate 5 years later and she threatens to sell the house and keep all the proceeds. The male partner lodges a caveat to warn potential buyers of his interest in the land and to try and prevent the sale until his interest is secured.
The key is that the interest is connected to the land. It is not enough, for example, to lodge a caveat over a property because someone owes you money. You need to use different legal avenues to try and recover a debt.
How is a caveat lodged?
Lodging the caveat in itself is a fairly simple process – it is a matter of filling out forms and filing them with the Land Titles Office.
However, there are a number of complexities in providing the information properly and being aware of the legal implications of your situation. For these reasons, it is a huge advantage to have the advice and assistance of an experienced conveyancing lawyer or property lawyer.
What happens after the caveat is lodged?
A caveat cannot be indefinite. The caveator must take steps to have their interest registered or to resolve the matter somehow.
The other party (the caveatee) may apply to the Registrar-General of the Land Titles Office to have the caveat removed. If this happens, the Registrar-General will give the caveator 21 days notice that the caveat will be removed. It is then up to the caveator to make an urgent application to the Supreme Court to have their interest registered or to resolve the issue in some other way. This usually means that there will be a trial so the Court can work out what to do.
It is important to understand that this is when legal fees will really escalate. Lodging a caveat may be inexpensive, but thought should be given to what happens afterwards. If keeping the caveat requires a trial, the cost of this should be factored into decision-making at an early stage.
If the Court decides that the caveat was lodged unnecessarily, the caveator may be required to pay compensation to the other party as well as their own legal costs.
Removing the caveat
As the caveator, you can remove the caveat, but you will be giving up your protection from the property being sold. It is never advisable to remove a caveat without careful consideration and sound legal advice.
A caveat serves as a great protection mechanism in circumstances that can otherwise be difficult and unstable. It’s important to protect your interests in real estate because once it’s sold there’s no guarantee that you’ll ever be able to secure your interest again.
The best way to approach caveats is with the help of an experienced property lawyer who can guide you through the process and provide you with valuable advice that may save you thousands of dollars in the long run.