A caveat (literally “a warning”) is a statutory injunction under the Real Property Act 1900 (NSW). It appears on the title to the land and prevents any registration of dealings and plans on the title. It also serves as a warning on the title to anyone who wishes to deal with the title by noting that another has an interest in the land. Combined, this allows for the protection of the relevant interest in land.
After a person lodges a caveat, they become known as the ‘caveator’.
While a caveat remains active, dealings in the land can only be registered if the caveat is removed or the caveator provides written consent for the dealing. For example, the owner of the land will not be able to sell the land unless the caveat is removed or the caveator’s consent is obtained.
Lodging a Caveat
Under the Real Property Act 1900 (NSW), any person with a ‘legal or equitable estate or interest in land’ may lodge a caveat with NSW Land Registry Services, if they have a ‘reasonable cause’.
The High Court in Boensch v Pascoe (2019) 268 CLR 593 confirmed a caveator has a ‘reasonable cause’ if the interest is, in fact, a ‘caveatable interest’, or the caveator had an honest belief, based on reasonable grounds, that they had a ‘caveatable interest’.
When a caveator lodges a caveat without ‘reasonable cause’, the caveator may be liable for any loss suffered as a result of such under the Real Property Act 1900 (NSW) and may be ordered by the Court to pay substantial damages.
To lodge a caveat, the ‘Caveat Form’ (Form 08X) must be completed and filed with NSW Land Registry Services. Upon lodgement, NSW Land Registry Services requires payment of a lodgement fee. The current lodgement fee for caveats is $165.40 as of 2023/24.
Caveatable Interests
Lodging a caveat requires the caveator to have a ‘caveatable interest’, which requires a genuine interest in the land itself and can be distinguished from other ‘interests’.
A ‘caveatable interest’ includes:
- The interest of a purchaser under a contract of sale of the land (called a purchaser’s caveat);
- The interest of a grantee under an option to purchase land;
- The interest of a lender where the loan has been secured by the land, such as in a mortgage;
- The interest of a tenant under a lease, including under unregistered leases;
- The interest of a chargee under a credit facility;
- The interest of any person who has a right of access to the land;
- The interest of a beneficiary under a trust of the land; or
- The interest of a victim of fraud.
Removal of a Caveat
There are three main methods of removing a caveat, namely by formal withdrawal of the caveat, by the lapsing of the caveat or by an order of the Court.
Formal withdrawal involves the caveator consenting to remove the caveat. This is usually done by either lodging with NSW Land Registry Services a ‘Withdrawal of Caveat Form’ (Form 08WX) signed by the caveator or their solicitor. NSW Land Registry Services also requires payment of a lodgement fee to withdraw a caveat. The current lodgement fee is $165.40 as of 2023/24.
Where the caveator does not consent to remove the caveat, the owner of the land may prepare an ‘Application for Preparation of Lapsing Notice’ (Form 08LX) and submit such to the Registrar General. The current lodgement fee is $165.40 as of 2023/24. The Registrar General will then issue a ‘lapsing notice’, which is to be served on the caveator. Unless the caveator can seek an order from the NSW Supreme Court to extend the operation of the caveat, the caveat lapses automatically within 21 days of the service of the lapsing notice on the caveator.
Alternatively, the owner of the land may apply to the NSW Supreme Court for an order for withdrawal of the caveat. Such application to the Court must be lodged with a ‘Request Form’ (Form 11R). Once orders are obtained, the ‘Request Form’ (Form 11R) along with a copy of orders of the Court must be lodged with NSW Land Registry Services (including payment of the lodgement fee).
How We Can Help
It is highly recommended that a person obtain legal advice before lodging a caveat or attempting to remove a caveat to avoid incurring liability for costs or loss as well as to ensure any application is properly prepared. At Valorum Law Group, we can assist with:
- Providing advice as to whether you can and should lodge a caveat on a title;
- Providing advice as to whether you should apply to remove a caveat on a title;
- The electronic lodgement of a caveat and an application for removal of a caveat;
- Providing advice on loss due to the registration of a caveat without reasonable cause; and
- Other dealings with NSW Land Registry Services or other relevant parties.
If you have any queries, please do not hesitate to contact us at admin@valorumlaw.com.au or voregan@valorumlaw.com.au. Our property lawyers will be on hand to assist you.
The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.
Contributors: Harry Chen
