Should I register a Caveat?

Hi everyone,

I received this following recommendation from my conveyancor.

"We strongly recommend registering a Caveat over the original title as it records your claim on title, it notifies those searching the title of your interest, and it prevents subsequent dealings by a third party with the title (if any) until you receive notification and have the opportunity to object (if necessary).

In our conveyancing opinion and experience, a Caveat is of utmost importance in protecting your claim over the property. Until your name is physically registered on the Title as the legal proprietor of the land, which can take upto three months after you have paid the vendor for the property, you are in a vulnerable position and at risk of a third party claiming an interest in the Vendor's Title, which may jeopardize your ownership of the property."

I'm new to this land buying thing and so would like to hear opinion from you guys and whether you did indeed register a caveat when you purchased your property. Btw, I was advised the cost to register a caveat would be $129.

Cheers...

Um....I've never heard of any conveyancer recommending that before. I know it's possible, but even in my years of working in home finance, I never once saw it done. We never bothered to do it in either of our land purchases - one was a house/land deal through a builder and the most recent land bought directly from the developer.

I suppose for me it would depend on who I was buying the land from and how reputable they were. But then, if I had doubts about them or the transaction, I wouldn't bother lodging a caveat, I just wouldn't enter into a contract with them in the first place.

There have been some land developers who've experienced financial difficulty and who've eventually collapsed over recent years, but I don't know that a caveat would give you any more protection than a purchaser without one? The contract of sale is your legal proof of a right to the property, a caveat is exactly what it says: a "caveat" (warning) to others looking at the title that you have some interest in the property.

It could protect you against "gazumping", but Australian property laws pretty well cover that anyway - you just get contracts exchanged as early as possible, and then the deal is binding on the vendor anyway.

What state are you in? Perhaps it's a common thing wherever you are ....it's certainly not a huge cost, so if you have any doubts at all, it might be worth doing.

Hi Kek,
Thanks for your thoughts. And I live in a SE suburb of Melbourne.

Hmm. I wonder if your conveyancer knows something you don't? Or perhaps they're just very cautious...

Like I said, it's a small cost, so if it makes you feel more secure, then do it.

Having working in real estate I have not heard of that one but of course could varied from state to state.I heard of it beening done for other reason but not that one.

Hello.

It's so funny this question has come up.... I am studying law and am just about to do a big property assignment, so maybe I can help a little (though remeber, it's just an opinion). It's not been common practice to lodge a caveat after exchange of contracts in Australia, but until the property is registered to you, there is always the risk that someone else may become registered (as the torrens system provides that title is by registration, not registration of title). The case of Black V Garnock in 2007 has now shaken things up a bit. In that case one of the high court judges said it would be 'bad practice' (or something along those lines) to not lodge a caveat. So, my understanding is, most conveyancers etc are recommending caveats now to cover their buts, and also yours.... thats my 2c... Hope it helped.

very useful information I studyed contract law in my dipomla in real estate but that was away back in the 90,s so you have cleared that up for me as it has happened in 2007 how things change

Our solicitor advised that caveats should not be placed when a property is not yet subdivided (which is our case) unless we have a reason for doing so. The reason is that the caveat will hold up subdivision. And our contract actually specifies we are not allowed to place one for that very reason.

But they recommended a caveat for all other situations, unless we have a good reason not to.

I'm buying in Victoria.

That's interesting, flicka, ta for the explanation. I looked up the case and I can see the issue related to a situation where the vendor had bad debts, with creditors taking action to ensure the property couldn't be disposed of and the proceeds whisked away. It also explains a question someone posted a while back about title insurance, which I'd never heard of and couldn't see the need for. Obviously, conveyancers aren't explaining this at all well to their clients.

This is a very brief summary, for anyone who's interested:

On 1 August 2007, the High Court delivered its decision in ‘Black v Garnock’ [2007] HCA 31, which has significant implications for Conveyancers.

The facts of the case involved the purchase of a rural property. Contracts were exchanged. The day before settlement judgment creditors obtained judgment against the vendor. A writ of execution was recorded in the register on the day of settlement, which was not revealed by a title search carried out by the purchaser's solicitor early on that day. Settlement took place, but the transfer could not subsequently be registered due to the writ.

The matter was appealed all the way to the High Court. The High Court held that the writ took priority, as it was registered and the transfer was not, irrespective of the fact that exchange took place before the issue of the writ. In its judgment, the High Court suggested that "old practices are best" and prudent conveyancing practice requires:
1. lodging a caveat between exchange and completion of contracts; and
2. ensuring a final search of the register is completed at the time of settlement.

The full high court decision is here: http://www.austlii.edu.au/au/cases/cth/HCA/2007/31.html (I love our legal databases - you can find ANYTHING! Er...does that make me a nerd? )

At least our real estate system doesn't suck like the UK one, where you don't know if you're actually going to have a place to live till the very last minute, because the vendors can just change their minds.

Registering a caveat is really unnecessary. On the morning of your settlement, your conveyancer will do a final title search of the property to ensure that you're getting clear title to the property. Then, at settlement, you (or your bank) are given the original certificate of title. The transfer is then lodged with the certificate of title shortly thereafter, transferring the property into your name.

In Black v Garnock, the final search was done in the morning which showed a clear title, then the ******* stuff took place between the time of the final search and settlement. Yes, a caveat would have prevented the result, BUT, the likeliness of something happening between final search and settlement is verrrryyyyyyyy slim.

In practice, caveats aren't used to protect your interests between exchange and settlement. You're paying your conveyancer to ensure you receive a clear title. Sure, there are recommendations out there suggesting all legal practitioners cover their backsides by doing so, but in every day practice, it is hardly ever done as it is time consuming, incurs additional expense and is generally pointless unless you're unfortunte enough to fall in the 0.00001% of cases as above.

a recent wa supreme court action , taught us there are different types of caveats...
The correct one might help you, and the wording is very important