What is a property caveat, and how do you deal with one?

What if the property is not in my name?

Property law matters can be very distressing for those going through them, and this feeling can be compounded when there are concerns the other party may seek to unilaterally deal with property. While the Federal Circuit and Family Court of Australia will view all assets, regardless of whose name they are in, as being part of the same pool, this does not prevent one party from unilaterally dealing with a property if it is in their sole name. This can be despite you making contributions to the property, for example by way of mortgage repayments or renovations, or being the primary homemaker or caregiver to any children.

What is a caveat?

One way to protect an interest in a property is to have a caveat recorded on the title. Caveats protect land or buildings not other pieces of property like a car or shares.

A caveat is a statutory injunction which serves to inform others of your interest in a piece of land.  A caveat can be lodged with the Land Titles Office in Victoria, or alternatively with the relevant Registrar of Titles of the state or territory which the property is in.

Once a caveat is lodged, it restricts that property from being dealt with in any way, such as selling, transferring or even further encumbering the property without notice to you. A caveat does not stop the property owner from drawing down on any existing mortgage or security registered against the property.

A caveat will remain in place until it is withdrawn, lapsed or cancelled. It ensures your interest is protected while negotiating your family law settlement or going through the Court process.

It is important to note that while a caveat protects an interest in property, it does not create an interest.

Can I lodge a caveat? If so, when should do it?

You can lodge a caveat if you have a caveatable interest in the land. A caveatable interest does not automatically arise from a simply being a party to a de facto relationship or a marriage, nor from having the right to make a family law claim. Financial contributions towards the purchase of the property, mortgage or renovations, or even certain non-financial contributions, may however give rise to an interest. The interest must be linked to the specific land in question.

You should seek legal advice about whether you have a caveatable interest in land before lodging a caveat. If a caveat is found to have been lodged without a valid interest being established, you are at risk of financial penalties including having to pay compensation for any financial loss suffered by the property owner and/or their legal costs.

Whether or not to lodge a caveat is also best answered with legal advice. Usually, it is important to lodge a caveat as soon as possible if you have caveatable interest. However, doing so may not always the best first course of action in family law matters, and there are potentially more appropriate avenues which should be explored.

What do I do if someone has lodged a caveat on my property?

If a caveat has been lodged on your property, but you do not urgently need to deal with the property, it is possible to negotiate the removal of the caveat as part of the larger property settlement. However, if there is no agreement, or if the matter is urgent, one of the following options may need to be taken:

Lodging a Lapsing Notice

A Lapsing Notice can be lodged with Registrar of Titles of the state or territory which the property is in, as well as a certificate from a lawyer stating that the caveat has been lodged without a valid interest.

This formal notice is then provided to the person that lodged the caveat (called the caveator). If the caveator does not respond within 30 days that they have commenced proceedings in a relevant Court to substantiate their claim, the caveat will lapse and be removed from the title.

Making an Application to the Supreme Court

If the caveat urgently needs to be removed and there is no time to wait for it to lapse, it might be more appropriate to make an application to the Supreme Court to remove it.

The caveator needs to establish to the Court that the claim is valid and the caveat should remain on the title. The caveator also needs to establish that the “balance of convenience” justifies the caveat remaining in place.

If the caveator does not attend Court, the Court will typically make an order to remove the caveat.

Next steps

If you have any queries about lodging a caveat, or how to respond when a caveat is lodged on your property, or your family law property matter overall, please contact our Family & Relationship Law Team for advice.