When you are purchasing a property is is the obligation of the seller to deliver clear title to you at settlement, with no encumbrances or interests, such as a mortgage remaining on the title.
Another such interest is a caveat, which is a registered dealing on the Certificate of Title, placed there by a third party claiming to have an interest or right in the property. An example of an affected third party would be a business who is owed money for work done on the property.
By placing a caveat the third party is claiming an interest in the property to protect themselves. Its registration on the title prohibits the registration of any further dealings on the title, such as a transfer. This means that a seller will not be able to settle the property and pass ownership to you as buyer until the caveat is removed.
A caveat can be removed is several ways, such as:
- The formal withdraw of the caveat by the affected third party lodging a ‘Withdrawal of Caveat’;
- The removal of the caveat by a court, by way of an order; or
- The lapsing of the caveat by way of registration of another dealing.
If you are selling your property, the lodgement of a caveat on the title can obviously prove very detrimental. As the owner of the property you do a remedy available if you feel the caveat has been registered without ‘reasonable cause’. You can apply to the Supreme Court to have it removed.
In order to sell the property, it is essential that the caveat placed on the title is withdrawn, or removed.