Caveats Dealings

If you buy real property in New South Wales, you may run into the legal terms caveat and dealings.

What is a Caveat?

A property caveat is a formal public notice indicating that there is a legal claim of interest on a property. Someone, called the caveator, registers a caveat over the land, which is basically a note on the title. This note effectively creates an encumbrance, a flag that limits certain transactions and warns others of the potential interest. A caveat can stop most dealings with a property title, such as registration of mortgage or sale of the property.

A caveat is an excellent tool to assist someone in securing their interests such as being paid their entitlement. For instance, someone who has a mortgage over a property may lodge a caveat to stop the property being sold without the mortgage being paid out.

Only people who have an eligible interest in the land can record a caveat on the title. In addition to a mortgage holder, someone with a life estate over the land can lodge a caveat, and caveats are sometimes used in family law matters when someone who is not on title has a financial interest in a property.

It is very important that you receive legal advice before lodging a caveat on a property. If you lodge a caveat without reasonable cause, you risk being responsible for the landowner’s damages and costs.

In NSW, a caveat can be removed by the caveator themselves, or the owner of the land can lodge a lapsing notice with the Land Titles Office. This notice requires the caveator to justify the caveat in court. If the court finds that the caveat was not justified, it will be removed, and the caveator may be responsible for the costs of the legal action and any other damage experienced by the property owner. This is the case even if the caveator genuinely believed they had reasonable grounds to lodge the caveat.

You cannot lodge a second caveat on the same property on the same grounds as the first caveat, so it is very important that you take whatever action is required to safeguard your interests in the long term before the caveat expires or is removed.

What is a Dealing?

In NSW, a “dealing” refers to a land transaction under the Real Property Act 1900, such as a transfer, mortgage or lease. These dealings are capable of being registrable on the Torrens Title Register.

Since October 2021, there have been two significant changes to land dealings in NSW. All conveyancing is now completed electronically, and a landowner’s interest in their land is recorded on a digital Torrens Title Register. As a result, paper Certificates of Titles have become redundant. Because paper certificates are no longer issued, the only way to prove ownership of land in NSW is through the digital Register.

Land dealings and caveats are a surprisingly complex area of law, so it is vital to seek proper legal advice. If you need assistance contact one of our lawyers at [email protected] or call 02 9150 6991 for expert legal advice