A caveat is a document which is lodged against a title to land and is notice by an interested party that no action is to be taken in relation to that title until that party’s interest has been taken into account.
The main purpose of a caveat is to prevent the sale or disposition of the land until the issue of the interest under the caveat has been protected or perfected.
The most common form of caveat is the caveat against dealings with a particular piece of land.
When would you want to lodge a caveat?
Examples of when a person may want to lodge a caveat are as follows :
- When a purchaser enters into an agreement to purchase land from the owner of the land and settlement is delayed or when a substantial deposit has been paid.
- Where a person has lent money to another person and as security for that loan the borrower has signed an agreement to mortgage.
- A tenant under an unregistered lease may wish to lodge a caveat to give notice of its interest in the land. It is important to note that the lease may contain a clause which provides that the tenant will not register a caveat. The sixth edition 2012 (4) of the Auckland District Law Society deed of lease contains such a clause.
- When a person has entered into an agreement to create an easement over another person’s land and the easement has not yet been registered on the title to the land.
The main point is that the interest has to be an interest in the land and not just some right against an owner of land. For example, an unsecured creditor has only personal rights against the debtor and therefore has no automatic right to lodge a caveat against the title to the debtor’s land.
Procedures for removal
A caveat remains in place until withdrawn by the caveator (who is the person who lodged the caveat against the title to the land), or lapsed, or removed by order of the High Court.
- Withdrawn by caveator
- The person who lodged the caveat can register a withdrawal of the caveat and the caveat will then be withdrawn from the title to the land.
- The owner of the land or a person having an interest in the land can apply to the Registrar-General of Land (“RGL”) for the caveat to lapse.
- The RGL will then give the caveator notice of the application to lapse the caveat. Once the caveator receives notice that an application has been made to the RGL, then the caveator has 14 days to notify the RGL that an application has been made to the High Court to sustain the caveat.
- If the caveator does not notify the RGL that an application has been made to the High Court to sustain the caveat, then the caveat will lapse.
- Removal by High Court
- The High Court may make an order that a caveat be removed if it is clear that there was no valid ground for lodging a caveat, or that the interest which in the first place justified the lodging of the caveat no longer exists.
- The onus is on the caveator to show that there is a reasonably arguable case for the interest to continue to be protected by the caveat remaining.
Published: 19 January 2015