Caveats affect many property settlements each year, but the processes involved remains misunderstood by many people. In this blog article, we will take a closer look at everything you need to know about real estate caveats. We’ll take you through the definition of a real estate caveat as well as the withdrawal of a caveat.
What is a real estate caveat?
A caveat is a legal notice that is filed against a piece of property. It acts as a notice that the caveator (the person who lodges the caveat) has a stake in the property. As such, a caveat is a notice on a title that cautions prospective purchasers, mortgagees, and others who want to do business on a property that a third party has a right or interest in the property.
What does a real estate caveat do?
The purpose of a caveat is to preserve and protect the rights of a person who seeks to have a caveat placed on a property, known as a caveator. A caveat on a property prevents it from being sold or disposed of without first giving effect to the caveator’s interest. Once a caveat is placed on a property, it cannot be sold, mortgaged, or transferred without the caveator’s permission. Unless the caveator agrees to the upliftment of the caveat, it lapses, is annulled, withdrawn, or removed, no further dealings with the property are permitted.
The ten principles on real estate caveats
- The caveat maintains and protects the caveator’s rights.
- It prevents the owner of the caveated property from selling it without the caveator’s permission.
- In general, only the caveator can consent to the caveat being lifted.
- In some cases, a caveat can be lifted or withdrawn from the caveated property.
- At the time the caveat is lodged, the caveator’s interest must exist.
- The caveator must establish that his claim is based on a transaction he conducted with the caveated property’s owner.
- The caveator’s interest must attach to the property
- The caveator must demonstrate that he has a matter pending which relates to the property.
- The caveat lapses when the pending matter is resolved.
- A caveat can only be placed on someone else’s property if the caveator has a good reason for doing so, such as an interest in the property.
Who can lodge a real estate caveat?
While it can difficult to define, there are many people who might lodge a caveat on a property.
- A person with an equitable interest in the land under a contract of sale.
- A land seller who has received part of the purchase price instalments but is no longer the registered owner.
- A purchaser who is not the registered owner but is paying the purchase price in instalments.
- An individual with a legal right to access the land.
- A tenant under an unregistered lease
- A creditor who wants to prevent the seller from disposing of the property.
- Equitable mortgagee.
- A beneficiary under a trust.
- A partner.
Reasons for lodging real estate caveats
A caveat will stop most (but not all) dealings with the title to a property. A property caveat can be used as a means of delaying a property transaction. Lodging one allows time for both parties to apply in court for their interest in the land. In some cases, a caveat is simply lodged to inform a third party about an interest being claimed.