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.
Contact
Tony
Johnson