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You may be in the situation where you want to stop a person from selling land that you have a legitimate interest in. If you fulfil the legal requirements, you may be able to do that by lodging a caveat on that land or title. But, this can be a complicated legal process, and you may find yourself liable if you do not meet the proper requirements to lodge a caveat. This article will outline:

  • what a caveat is;
  • when you can lodge one;
  • how you do so; and
  • how you remove a caveat.

What is a Caveat?

Caveat is a Latin term meaning “beware” or “warning.” In legal terms, this is a formal document that serves as a warning to anyone wanting to purchase land that you (the caveator) have an interest in that land. This then stops any further commercial dealings until the caveat on the land does not exist anymore. You may wish to lodge a caveat on the property in the following circumstances

  • you do not want the owner to sell or register any other interests on the land (such as a mortgage) until that caveat ends;
  • someone has lent a title to you, and you have agreed with your guarantor that you should lodge a caveat registering your interest in the title; or
  • you have purchased a property, and there is a long time between signing the contract and the settlement date. So, you want to make sure the owner does not enter into any other commercial dealings against your interest.

When Can I Lodge a Caveat?

You can only lodge a caveat in land or title if you have what is known as a legitimate “caveatable interest”. This means that you have a legal or equitable interest in the land. You also need to have a reasonable cause for lodging one. This prevents any arbitrary caveats from being lodged and stopping further business. You can have a caveatable interest if you are a:

  • party to a sale and purchase agreement;
  • party to an option to purchase;
  • lessee of an unregistered lease or agreement to lease;
  • grantee of an unregistered easement;
  • mortgagee under an unregistered mortgage or agreement to mortgage;
  • beneficiary of an express or implied trust that holds the land; or
  • nominee/assignee of a purchaser of the land.

There are also other ways you can have a caveatable interest, so it is important to seek legal advice if you are unsure.

How Do I Lodge a Caveat?

Land Information New Zealand (LINZ) will assess whether you can register a caveat, using the requirements set out in the Land Transfer Act. Still, you have the responsibility to make sure you have a legitimate caveatable interest when you lodge it. Making a mistake during lodgement can have serious consequences, so it may be a good idea to use a lawyer to act as your agent and register your interest. There a few requirements you must meet in the documentation itself – these include, but are not limited to:

  • providing your name;
  • describing the land you have an interest on;
  • showing your interest in the land;
  • showing how your interest relates to the land’s registered owner; and
  • giving your address.

How is a Caveat Removed?

There are three ways somebody can remove a caveat:

  1. you may withdraw it as the caveator;
  2. the owner of the property or someone else with an interest may apply for it to lapse; or
  3. by court order.

Someone else who has an interest in the land or the owner of the property can apply to LINZ for a lapsing notice. If this happens, and you wish to keep your caveat, you need to make an application to the High Court to stop it lapsing. You have ten working days from the point the lapsing notice is delivered to you to give notice to the Registrar General of Land that you have made such an application. You have to prove your caveatable interest, or else it can be removed.

This is why it is crucial to make sure that you have a legitimate caveatable interest before you lodget. If it comes out at any point in this process that you do not, then you are liable, and you have to pay compensation. It is important to keep written records of any dealings that generate the interest you are relying on for your caveat.

Key Takeaways

A caveat exists as a warning to any future buyers of land that you have an interest in the property or title. It prevents any further commercial dealings until it is lifted. This can be useful if you want to stop this process. You need to have a legitimate caveatable interest in the land before you lodge a caveat. If you do not, then you open yourself up to legal consequences. If you want more information about caveats, contact LegalVision’s property lawyers on 0800 005 570 or fill out the form on this page.

FAQs

What is a caveat?

A caveat is a document you file that attaches to a piece of land that you have a legitimate interest or stake in. This serves as a warning to any future buyers of that land that there is an already existing claim to it.

When can I lodge a caveat?

You can lodge a caveat if you have a caveatable interest in the land. This means that you either have a legal or equitable claim to that land. Some examples include: you are a lessee or mortgagee of the land or a purchaser in the process of buying the land.

Why would I lodge a caveat?

A caveat protects your interest in the piece of land you want to protect. This means that the owner of the land cannot sell it until they have removed it. So, you can prevent any future dealings until you have resolved your interest.

What does a caveat include about me?

The caveat document will include your name, the land in question, why you have an interest in that land, how that relates to the land’s owner, and a contact address for you. It does not include why you have lodged the caveat.

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