Caveats for caveats

An introduction to caveats over land in Western Australia

We have approached numerous times recently by clients seeking advice about their rights over the property in which they live but where the property is solely in their partner’s name. These clients have contributed to the purchase price and/or been paying the mortgage over many years. They had a mutual understanding with their partners that the property belonged to them both, but the title has never been changed to reflect that.

When the relationship breaks down, or is about to, suddenly these clients want to ensure their interests in the property are protected – and that leads them to think about caveats.

What is a caveat?

Under the land titles system in Western Australia, the certificate of title as held by Landgate is determinative of rights and interests in land.

The Transfer of Land Act 1893 (WA) (TLA) creates a statutory scheme for placing restrictions on titles to land – which can have the effect of entirely preventing dealings on that title, meaning a property cannot be sold or mortgaged.

It is analogous to a statutory injunction preventing the registered proprietor from dealing with the land in a manner inconsistent with the caveat.

While the caveat scheme is not primarily aimed at giving notice of interests, the fact that caveats are recorded on titles, and titles are publicly searchable, means that caveat can also operate as notice of a claimed interest in the subject land.

While a caveat must be based upon a proprietary interest over the land, it is not itself determinative of that interest – it merely preserves the status quo.

Who can lodge a caveat?

In order to lodge a caveat you must hold a proprietary interest in land[1]. It is important to recognise that this is different from a claim against the owner of the property. So, just because Joan Jones owes you money, does not mean that you can caveat her land.

However, if Joan signed a document charging her property with payment of the debt, or even told you in writing that she would pay you from the proceeds of sale of the property, then you go from having a simple claim in debt against Joan, to having a proprietary interest in the property.

There are a number of recognised categories of proprietary interests in land capable of supporting a caveat, including specifically enforceable contracts to purchase the property, holder of an easement, a beneficial interest under a trust, a charge over the land for repayment of debts – including for such things as building contracts, to protect mining or timber rights.

Of course, there are also things that are not a basis for a caveat, including such things as being a beneficiary under a will, or mere possession of the site – for example under a building contract. In addition, the requirements that interests in land be created in writing and signed by the grantor[2] will also cause issues with substantiating other claims to a caveatable interest.

How do I lodge a caveat?

The lodgement of caveats is largely administrative. Landgate does not determine whether your claim is valid or not, and lodgement of a caveat on the title does not mean you have the rights you claim. So long as the caveat application is properly completed, and the interest claimed both a recognised class and properly supported when necessary[3], Landgate will accept and register the caveat.

However, nowadays almost all dealings in land are electronic using the PEXA platform, so caveats are now routinely lodged through PEXA. The PEXA user who lodges the caveat application is an important gatekeeper to ensure that caveats lodged for registration have a proper foundation.

It is important that a caveat is properly claimed. Misidentifying the interest claimed, the extent of the caveat, or even whether the caveat should be absolute, subject to claim, or subject to notice, can all be a basis for the removal of the caveat – even if there is a proper basis for the caveat.

What should I do if I receive notice my property has been caveated?

Well, that depends. Do you acknowledge that the caveator has a right to caveat the property and that they have properly reflected?

Do you need to deal on the title?

If you accept the caveat is valid and you do not need to deal on the title, then you can simply do nothing. However, if you do not accept the caveat or do need to transact on the title, you may need to consider having the caveat removed.

How do I remove a caveat?

There are three ways in which caveats can be removed.

1. The caveator can withdraw the caveat.  This can happen where the debt secured by the caveat is paid, or where the interest claimed has lapsed, or where the caveator is satisfied the caveat has no purpose – for example where the bank holding the mortgage will take all the sale proceeds so there is nothing left for the caveator.
2. The property owner can request that a 21 day notice be issued. If the caveator will not remove their caveat voluntarily and the owner of the property believes the caveat is not justified, they can apply for the Registrar of Titles to issue what is called a 21 day notice – which requires the caveator to obtain a court order within 21 days or their caveat will automatically lapse.
3. The property owner (or other person having an interest) may file a summons in the Supreme Court requiring the caveator to show cause why the caveat should not be removed.

What do I do if I have received a 21 day notice?

If you wish to maintain your caveat, you must bring an application in the Supreme Court as a matter of the utmost urgency – because just bringing the claim is not sufficient, you must obtain an order extending the caveat within the 21 day period. The Court may be willing to grant an order extending the caveat for a short period to allow the matter to be properly argued and material brought before the Court, but speed is of the essence.

It is also common for Courts to expect caveators to take steps not merely to justify their caveat – but to justify the interests underlying the caveat. So, if the caveat is based on an equitable claim, the Court may expect or require the caveator commence proceedings to vindicate that equitable claim.

What happens if I lodge a caveat wrongfully?

As mentioned above, the lodgement of a caveat is essentially administrative – if the form is filled in correctly, it will generally be accepted. That means sometimes unscrupulous people can lodge caveats when they have no legitimate proprietary interest in the land being caveated – and instead are just trying to obtain security to which they are not entitled, or exert pressure on a person.

The TLA does provide a compensation mechanism for the wrongful lodgement of a caveat – a person who has sustained loss and damage as a result of the lodgement of a caveat without reasonable cause is entitled to apply to the Supreme Court for compensation by summons. The reality is though, that the costs of doing so will generally substantially outweigh the costs of issuing a 21 day notice.

However, sometimes the wrongful lodgement of a caveat can delay a sale of the property or even a substantial development. In those circumstances, seeking compensation may we warranted.

Conclusion

As with all things property law, the lodgement and removal of caveats can be tricky, but if you need any assistance, the team at CS Legal is ready to help. While we cannot offer advice in relation to your property settlement rights in circumstances where your relationship has broken down – we may be able to assist you to protect your property rights until that issue is resolved.

[1] That is, a claim in rem, not in personam.

[2] S. 34 Property Law Act

[3] Landgate will sometimes require supporting documentation for caveats, including a statutory declaration in the appropriate circumstances.