According to the Real Property Act, a person who claims a legal or equitable estate or interest in land ('caveator') can lodge a caveat against the property of another ('owner').
This usually happens in the context of separation when one party is not registered on the title and is fearful that the other party will sell or otherwise deal with the property against their interests, or if there is a sum of money owed to that party by virtue of a Financial Agreement or Court Order and wish to secure their interest.
Being in a marriage or de facto relationship in itself does not give a caveator an interest in the owner's land to allow the caveator to lodge a caveat. A claim under the Family Law Act is not in itself a caveatable interest.
A right to the proceeds of sale of a property is also not a caveatable interest. The caveatable interest must be in relation to the land itself and not the proceeds of the land after it is sold.
This becomes more complex if the property is held by a company. Being a shareholder of a company in itself does not give rise to a caveatable interest. Contributing funds to a company towards the purchase of a property does not give rise to a caveatable interest.
A Court Order allowing for the lodgement of a caveat does not in itself give rise to a caveatable interest.
That is to say, if parties separate and the caveator lodges a caveat without further justification to prevent the owner from selling or encumbering their interest, it is easy for the owner to lodge a 21 day lapsing notice, which will lapse the caveat after 21 days if no application otherwise is made in the Supreme Court (and granted). The caveator is also likely to be liable for any costs incurred, and for lawyers, a potential finding of professional misconduct.
What do I do then?
- To effectively lodge a caveat following separation, the caveator must show that they have an interest in the property as the result of an implied, resulting, or constructive trust. For instance, the caveator must be able to show that he or she has in fact made contributions directly towards the property such as paying a sum of money towards the mortgage, or towards renovations. This does not stop the owner from lodging a 21 day notice; however, if the caveator has a good argument for this he or she will be more likely to successfully retain the caveat on the title when the matter is heard. Alternately the owner is less likely to lodge such notice if he or she is aware that they have a weak case.
- It is possible, especially where leeway is being given to a party to allow for delayed payment, that an owner will consent to the caveat being lodged on the title. The owner can sign on the caveat document, that they agree to such lodgement. Alternatively, the owner (as an individual, or as the sole director and shareholder of a corporation) can allow a charge on the property in favour of the caveator to secure the outstanding money owed, and can then lodge a caveat to secure said charge.
If the caveator does not have a caveatable interest, then he or she should consider urgently commencing an Application in the Family Law Courts to seek injunctions (restraints on a party doing certain things e.g. sell or deal with real estate).
Separation is a stressful time, and parties can be made more stressed by dealing with such matters. We encourage you to seek legal advice as soon as possible so as to understand how you can best protect yourself.
For further information please contact:
Sherlene Heng
Phone: + 61 2 9233 5544
Email: sxh@swaab.com.au
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
