In this blog we explain in under 5 minutes all that you need to know about CAVEATS for QLD property / conveyancing...

What is a caveat? How do I get rid of it? What do I need to put on the contract? Is this a show stopper for my deal? We answer all of the above and more in this blog. 

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Hi everybody - George Sourris, Empire Legal.

Today's topic: What is a caveat in QLD property? 

This week we are talking about caveats.

Have you seen a caveat on Title but you're not exactly sure how to explain what they do or why they are there?

What is a caveat?

The Latin translation of "caveat" literally means, "may he beware of".

Caveats are often lodged when parties are in a dispute over property or financial matters. The caveat preserves the status quo of the property Title to allow time for the parties to resolve a dispute; either between themselves or throughout the court system. Or, to ensure a party who has a caveatable interest in the property doesn't miss out when it's sold, by preventing the current owner from transferring the Title to another party.

The Land Title Act (1994) QLD primarily governs the creation, use and effect of a caveat. 

When are caveats used?

Usually, a caveat is lodged when someone is owed money. The person owed money may lodge a caveat over the land to prevent the property being sold so they can secure payment from the party that owes them the money. However, the fact that someone is owed money does not give them an automatic right to lodge a caveat.

The correct process is that you must have what is known as a "caveatable interest" in the land. 

Well, we're not going to unpack exactly what this term means in this blog. However, please note it is quite long and complex and requires tailored legal advice. What you do need to know is that any person who lodges a caveat without a proper basis may be liable to compensate anyone else who suffers loss or damage as a result of the caveat.

How to lodge a caveat?

At the time of writing this blog, it will cost you $266.45 in registration fees at the Titles Office Queensland, plus the lawyer fees to prepare the caveat. There is a Titles Queensland form required, and there is a process to be followed to validly lodge a caveat over a property.

There are, broadly speaking, two types of caveats: automatic lapsing caveats and non lapsing caveats.

An automatic lapsing caveat is lodged without the consent of the registered owner. Common example, when the registered owner owes the caveat lodger money. Once lodged, the lapsing caveat sits on the Title of the property and lasts for 90 days. 

Non lapsing caveats are lodged with the consent of the registered owner. A common example of this would be an unregistered mortgagee's interest in the land. While a caveat remains on Title the property cannot be sold as the Title cannot transfer unless the caveat is removed. Furthermore, additional mortgages cannot be added whilst there is a caveat over the property.

The 90 day timeframe for automatic lapsing caveats lodged without the owner's consent is there to allow the party that lodged the caveat sufficient time to commence court proceedings. If the proceedings are not started within this timeframe, special leave from the court is required to allow a second caveat to be lodged.

What do I put on the contract?

Great question. This is a common query. Put simply, you don't have to put anything. If you include reference to the caveat in the matters affecting the property section on page 3, the standard terms of the contract come into play whereby the buyer is purchasing the property inclusive of anything listed here.

So definitely do not do this. We do not want that to happen. Think of it like a mortgage - in whereby the seller is required to release it on or before settlement, otherwise they are in breach of contract.

Now you may wish to discuss with the seller whether they might have difficulty in having this caveat removed, in which case they should chat with their solicitor urgently about drafting a clause to allow them time to terminate in the event they are not able to release the caveat by settlement.

Special thanks to Chris Pilkington or "Pilko" from Place Estate Agents for this topic suggestion. You are a legend. 

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Note: all information is general in nature and as each matter is unique please contact our office for tailored advices: the above does not constitute legal advice.