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The mighty caveat

By Tony Johnson - 30 May 2018

Short of a registered mortgage or the property being registered in a party's name as owner, a caveat remains one of the most powerful tools for a party wanting to protect their security interest or their proprietary interest in a property.

The general effect of lodging a caveat is that as long as the caveat remains registered on the title, the Land Registrar is unable to enter any other transactions on the register, which will charge, transfer or otherwise affect the interest protected by the caveat.

A caveat can be registered very easily. It does require the caveating party to allege the existence of a beneficial interest in the land (security interest or proprietary interest).

The recent High Court decision in Luxe One v Jarcel Investments is a good example of the power of a caveat. Upon entering into a sale and purchase agreement, the purchaser lodged a caveat based on its proprietary interest created by the agreement. The purchase price was not paid on the settlement date. No settlement notice was issued and instead, the vendor's mortgagee purported to cancel the agreement.

The Court determined the mortgagee could not cancel the agreement because it was arguable that the purported termination of the agreement was not valid. As a result, the purchaser's proprietary interest remained in place and the Court ordered that the caveat not lapse.

If the caveat had not been lodged, the mortgagee would have been able to conclude a mortgagee sale with a third party. The purchaser's rights would not have been protected. The caveat served its purpose.

If you are in a dispute relating to a non-registered security interest or a proprietary interest or if you wish to protect your position prior to a dispute arising, we can provide you with further expert advice in this area.


Tony Johnson


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