Caveatable Interests - What's Allowed and What's Not

Renee Dey

It is not uncommon when dealing with Relationships, Estates, or Business matters that you come up against the question - Can I caveat the title to protect my interest? 

Under the new Land Transfer Act 2017, section 138 covers the four scenarios where a person may lodge a caveat against dealings involving land. This list is not necessarily exhaustive as there are a number of grounds based in equity that would give rise to caveatable interest; the most common is a constructive trust. 

Below is a very brief summary of when you can and cannot caveat a title. It is intended merely as a guide,  to dispel some myths and is by no means an exhaustive list.

CAN REGISTER A CAVEAT

  1. If you are the unconditional purchaser under an Agreement for sale and purchase.
  2. When you are an unconditional sub-purchaser under an Agreement for sale and purchase (common in a subdivision scenario).
  3. As the purchaser of shares in a company where that company owns land and the agreement specifically states the purchaser has the right to caveat.
  4. As a beneficiary under a Trust you can caveat the Trust’s property provided you can specifically identify the land, or property that was purchased from Trust funds and your right in that property is a proprietary interest.  
  5. Where you are a qualifying de facto partner or spouse and living in property owned by the other partner or spouse, and that property constitutes the Family Home under the Property (Relationships) Act 1976. You can also loge a Notice of Claim over the property pursuant to the Property (Relationships) Act 1976 which is more common in this situation.
  6. Where someone has acquired property by fraud, the defrauded party can lodge a caveat and force the fraudster to hold the property on a constructive trust. 
  7. Where you have contributed to the purchase of land (not by loan or gift) and although not registered on the title, you have a reasonable expectation of taking an interest in the land and so a resulting trust is established.
  8. Where you hold an option to purchase a specific area of land subject to that option.
  9. Where land was purchased from you by the Crown for public works, and that land is no longer required, section 40 Public Works Acts 1981 creates a caveatable interest by the former vendor over the land to buy back the land.
  10. Where you have been granted a right of way or a right under an easement over land.
  11. Should you be an unpaid vendor by fraud on behalf of the purchaser.
  12. Grant of a right to occupy a property pursuant to a Will.

CANNOT REGISTER A CAVEAT

  1. If you hold a first right of refusal to purchase land, there is no equitable interest in that land until an offer has been made.
  2. If you are a shareholder of a company, you cannot caveat the title to property owned by the Company.
  3. You cannot caveat your own title unless you can satisfy the Register that it may be lost through an act of fraud.
  4. As a beneficiary under a Will you cannot caveat the title to a living Willmaker’s property.
  5. If you have been declared bankrupt then you cannot register a caveat on property not declared to the Official Assignee.
  6. If your agreement or lease specifies a ‘no caveat clause’ then no caveat will be upheld unless there are public policy grounds to allow the caveat such as a breach of contract.
  7. A Deed of Acknowledgement of debt that does not include a right to mortgage only creates a personal right against the debtor and so a caveat cannot be lodged over land owned by the debtor.
  8. Just because an agreement provides a right to caveat a title, this is unlikely to be sustained if there is no existing proprietary or equality right in the land. The express clause does not in and of itself create and caveatable interest. 

If you are at all concerned about your interest in property, please make a time to come and see us to discuss your circumstances.