Caveats may be lodged over property in certain circumstances by people who are owed money by the landowner. However, as RMB Property Lawyer Tanya Emmett explains, strict conditions apply.

A caveat is a statutory injunction lodged with Land Registry Services that prevents the registration of subsequent dealings or plans on the title to the land. It acts as a warning that somebody has an interest in the land.

A person who lodges a caveat on title is known as a ‘caveator’. 

Once a caveat is recorded on title, new dealings can only be recorded if the caveat is removed or by obtaining the caveator’s written consent. A caveat can be removed by lapsing, by court order or if it is formally withdrawn.

Caveats are commonly sought to prevent the sale of land. An owner of land with a caveat recorded on its title could only complete the sale if the caveat is removed. A person owed money could use this action to demand the debt be repaid from the proceeds of sale.

Caveats can be an effective way of protecting rights under an agreement and can be relatively straightforward. However, it is also easy to get it wrong.

To lodge a caveat, you need to establish that you have a ‘caveatable interest’ in land – a legal or equitable (proprietary) interest. Being owed money is not of itself sufficient reason. There must be a written agreement containing a condition expressly charging the debt to the land.

The Real Property Act prescribes those permitted to lodge a caveat and procedural requirements which must be satisfied before the Registrar-General will accept the lodgement of a caveat.

In particular, it provides that a caveat must specify prescribed particulars of the legal or equitable estate or interest to which the caveator claims to be entitled. These include:

• The manner in which the estate or interest claimed is derived.
• Details of the nature and date of an agreement if the caveator’s claim is based on a written agreement.
• Details of the amount of the debt or other sum of money charged on the land.

A person who lodges a caveat without a caveatable interest in the land can be made liable to pay compensation to the landowner for any loss that they suffer as a result.  A landowner can formally object to the caveat by commencing legal proceedings in the Supreme Court.