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Caveats – an effective weapon – when and how to use them to your advantage

A caveat is a written warning or an entry made in a register (usually held by the Land Titles Office) to prevent action being taken with regard to particular land without notice being given to the person who has lodged the caveat (the Caveator).

A caveat operates like an injunction. A caveat may be lodged by a person holding a legal or equitable interest in land.

Examples of caveats include:

1. A caveat by a person claiming an estate or interest in land;
2. A caveat by a person with a recognized “caveatable interest” such as:
2.1. The registered proprietor of land;
2.2. The purchaser of land;
2.3. A person entitled to a mortgage or charge.

A “caveatable interest” is a proprietary interest and it does not include a purely contractual or personal right.

However, in the commercial world, Creditors who, for example, supply goods to a Debtor, often include in their (the Creditor’s) trading terms and conditions a right to register a mortgage or other instrument of security or consent to a caveat over land owned by the Debtor (or a person who has guaranteed the debts of the Debtor — usually a director of the Debtor company). This in effect gives the Creditor “security” in the land owned by the Debtor (or the Guarantor) for payment of the debt owing by the Debtor to the Creditor from time to time.

Accordingly it is an important element of the trading terms and conditions of any business that in appropriate circumstances there is agreement between the parties that a Creditor has a right to register a caveat over land owned by the Debtor (and/or a Guarantor).

Rosendorff Lawyers can advise in regard to when it is appropriate and under what circumstances a caveat can or should be registered. The advice in this communication is general advice only and you should not rely on this advice unless you obtain legal advice specific to your own requirements.

Should you have any queries, please do not hesitate to contact Chris Wray on 8320 2951 or Brett Samuel on 8320 2957.

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