LAWS 205 - 'Caveats'

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What is a caveat?

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A caveat is an equitable interest in land that protects a caveator's unregistered interest in the property.

This is achived by notifying the registrar general, not to proceed with any dealings ascociated with the land, because someone is claiming to have an equitable interest in it.

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Who is capable of lodging a caveat?

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Any person that claims to have an unregistered/ equitable interest in the property may be able to lodge a caveat on it.

For example, under ss 138 of the LTA 2017, anyone, who claims to have a beneficial interest in the property arsing from a trust, is capable of lodging a caveat on the ROT.

However, if the caveator, lacks any interest in the property, due to it being sold to a bonafide purchaser for value without notice, they may not be able to lodge a caveat on the ROT - Gordon.

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What are some other situations in which, a caveat cannot protect an unregistered interest in land?

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Under s 140 of the LTA 2017, if the registered owner has passed away or is bankrupt, or there has been a court order, the caveat can come off the title.

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What type of interests, are capable of supporting a caveat? Why?

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In the case of Foreman, the court held that an unconditional ASAP, can give rise to the purchaser, having a beneficial interest in the property, due to the contract.

However, in the case of Bevin, the court held that even a conditional ASAP, can give the purchaser an equitable interest in the property, capable of supporting a caveat.

If the intention of the parties is that the purchaser acquire an equitable interest in the property upon acceptance, and the terms state accordingly, then the court may hold that the purchaser has a beneficial interest in the property capable of supporting a caveat - Mcdonald.

Moreover, if the condition upon which the contract was based, can be waived at any time by the purchaser, or is a mere formality, the court may hold that the purchaser has an interest in the property capable of supporting a caveat.

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What are some other types of interests capable of supporting a caveat?

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A beneficial interest is capable of supporting a caveat under s138(1)(b) of the LTA 2017.

For example, in a trust where one party holds the other parties estate or interest in land on trust for the benefit of the other party, the other party has a beneficial interest in that estate/interest in land.

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How can such a beneficial interest arise?

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Money that is used to invest in properties, can be the subject of the beneficiaries equitable interest in the property - Zhong.

However, if the beneficiaries interest is only in the funds and not in the property itself, then that is an interest that is not capable of supporting a caveat- Willigers.

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What type of issues can arise out of the above-mentioned situation?

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If 'A' breaks faith and want's to sell to 'C', because 'C' is unaware of 'B' unregistered interest, 'B' can have trouble purchasing the property if it is sold to 'C'.

This is because 'C" is a bonafide purchaser for value without notice.

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How can 'B' resolve this issue?

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'B' can lodge a caveat on the record of title to 'A' property which can alert the registrar general not to proceed with the transaction of the property to 'C' because 'B' has an equitable interest in it.

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Who can/cannot lodge a caveat?

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Any person that can claim an interest in land based on reasonable grounds, is capable of lodging a caveat.

For example, in the case of Gordon, the caveators as vendors did not have reasonable grounds to claim an interest in the purchasers property, because by the time they lodged a caveat, the purchaser was already the registered owner of the property.

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When can a conditional agreement for sale and purchase, give rise to an equitable interest in land capable of supporting a caveat?

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When the parties form an agreement for the sale and purchase of land, and that agreement is conditional upon a mere formality that inevitably will be fulfilled, then the court may hold that such a conditional agreement for sale and purchase of the land, is an unconditional agreement for sale and purchase of the land.

This means that the purchaser aquires an equitable interest in the land upon the formation and excecution of the relevant documents for sale and purchase of the land, and that interst is capable of supporting a caveat.