Lodging a caveat can be a strategic way of forcing one’s hand to address an issue involving another person’s interest in a property they do not legally own. It can alternatively be a protective measure to give notice to the world of your interest in a property you do not legally own. A caveat does not convey the caveator any degree of ownership in a property, but it can be a roadblock for any attempted dealings with that property, for example, a sale of the property, as the caveat would need to be lifted to enable the sale to proceed.
In Victoria, there are essentially two (2) means by which a registered proprietor (a land owner) can seek the removal of a caveat on the title of their property.
s89A of the Transfer of Land Act 1958 (Vic) (‘the Act’)
Pursuant to s89A of the Act, a registered proprietor can file an application to the Registrar of Titles seeking the removal of the caveat on the basis that there is no right for that caveat to remain on title. The application must be supported by a certificate from a barrister or solicitor stating that in their opinion, the caveator does not have sufficient interest in the said land.
This prompts the Registrar to give notice to the caveator that their caveat will lapse in 30 days unless within that time, the caveator issues legal proceedings to fight to keep their caveat on title.
PROS: This is a relatively inexpensive exercise and puts the onus squarely on the caveator to commence legal proceedings to have their caveat remain on title.
CONS: Given the 30 day notice period provided by the Registrar to the caveator, it is not the ideal means of seeking an urgent removal of a caveat, for example, in circumstances where there is a property settlement looming. Even if a caveator does follow through and commence legal proceedings to seek orders to allow their caveat to remain on title, those proceedings are unlikely to be expedited without a further application to the Court.
s90(3) of the Act
Section 90(3) of the Act is a more direct means of seeking the removal of a caveat as it brings the issue before the Supreme Court for determination. The registered proprietor files an Originating Motion and a supporting affidavit seeking court orders for the removal of the caveat, often with cost consequences against the caveator for having lodged the caveat in the first place.
For their part, the caveator can only defend their caveat by convincing the Court that there is a serious case to be tried in respect of their claim in an interest in the said property. If they can successfully argue this, they must then show that the balance of convenience favours their caveat remaining on the title until the conclusion of those Supreme Court proceedings. In those circumstances, the Court may require the caveator to provide an undertaking to pay compensation to any person affected by the continuation of the caveat on title, (such as a party to a looming settlement of the property where that settlement is delayed as a consequence of the caveat remaining on title).
PROS: An application pursuant to s90(3) can be filed, listed and heard quickly where there is an urgent determination of the matter required. This is generally more efficient than allowing a caveator 30 days to contemplate the commencement of their own proceedings to fight to keep their caveat on title. If the registered proprietor is successful, they may be entitled to a costs order against the caveator as a consequence of having to file proceedings in the first place.
CONS: The Supreme Court can be an expensive jurisdiction for all parties involved in proceedings.
Caveators, and persons considering lodging a caveat, are cautioned to ensure they have reasonable cause for lodging a caveat as there can be costly financial consequences that come with the removal of one’s caveat, if it is ultimately found to have been lodged without sufficient reasonable grounds. This is a risk even if the caveat is subsequently voluntarily removed, as was the case in Love v Kempton & Anor 2010 VSC 254, which resulted in an indemnity costs order against the caveator.
It is important for caveators and prospective caveators to obtain legal advice before taking any action in respect of an interest in a property. Contact us today for a frank discussion on your options. Our experienced litigation team is ready to assist.
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