Caveats, Writs and Priorities A Guide to Protecting Your Interests

In the diversifying property landscape of Australia, where your most important asset is increasing in value at a rapid rate, it is essential to understand some of the ways to protect your interests when purchasing land.

Caveats, Writs and Priorities are fundamental mechanisms in property law and understanding their operation and knowing when to utilise them can save considerable costs.

What is a caveat?
  1. A caveat is a statutory injunction within the Real Property Act 1900.
  2. A caveat informs others that you have a proprietary interest in the property and will prevent the registration of a dealing on the property without your consent
What is a caveatable interest?
  1. Section 74B of the Real Property Act 1900 states that a person must have a legal or equitable estate or interest in land.
  2. Please note that the interest must be in the land, not merely a contractual or personal right.
  3. The interest must also be express and exist at the time of lodgment, it cannot be a future interest.
  4. Under section 74P of the Real Property Act, a person can be liable to pay any person who sustains pecuniary loss attributed to the lodging of a caveat without reasonable cause.
Removal of a caveat
  1. The procedure for the removal of a caveat is for the party wishing for its removal to write to the Caveator, and invite them to execute a Withdrawal of Caveat to remove the caveat lodged by them from the title to the property.
  2. If you do not respond to the request to withdraw the caveat, a Lapsing Notice can be filed with the Registrar General for the removal of the caveat.
  3. You can then (1) make an application to stop the lapsing of the caveat or (2) not respond to the notice which will result in the caveat automatically falling away.
Obligations for removal of a caveat
  1. Caveats are removed where:
    • a dealing or delimitation plan is lodged;
    • an application is made by the proprietor of the estate or interest to lapse the caveat;
    • an application is made to extinguish the caveat.
  2. There is generally no obligation for a caveator to take action to remove a caveat, however, not doing so may lead to cost consequences if this was determined to be unreasonable in the circumstances (particularly if there is an issue with the initial right to place a caveat in the first place). If a lapsing notice is filed for the removal of the caveat, the caveator can choose to respond and justify the existence of the caveat or to refrain from responding, which will result in the caveat falling away.
Caveats lodged by a purchaser
  1. It is advisable for purchasers to lodge a caveat to protect their interest under an agreement for sale as a mechanism to minimise the risk of the sale falling through.
  2. In Black v Harnock (2007) the High Court of Australia 31, articulated how a caveat can avoid significant costs down the line.
    • In Black the day before the settlement of a matter, a third party creditor obtained a writ empowering the sheriff to seize and sell the property for the purposes of satisfying the debt owed by the vendor to the third party creditor.
    • The writ was allowed because the purchasers had not registered a caveat on the title and this writ stopped the purchasers from registering the transfer on the title.
    • At settlement, the vendor’s mortgagee was paid out and the balance of sale proceeds went to the vendor, however, as the third party creditor was still owed the debt, the third party refused to allow the removal of the writ from the title unless the debt was paid.
    • Ultimately, it was determined by the High Court that, as the writ was registered prior to the purchasers’ effort to register the transfer, the writ defeated the transfer and as a result, the purchasers had to pay the vendor’s debt to the creditors in order to have the writ removed from the title and their transfer registered.
  3. The High Court noted that the purchasers should have lodged a caveat on the title of the property upon entering into the contract to protect their interests. Noting Black, it is highly recommended that prior to lodging a caveat, one should seek legal advice. It is also essential that you refer to the special conditions in the Contract for Sale. The special conditions of a Contract for Sale may prevent purchasers from lodging a caveat, particularly where the contract is Off the Plan and, if a purchaser proceeds to do so, depending on the terms of the contract, they may indemnify the vendor in respect of loss to the vendor as a result of the caveat being lodged.

 What is a writ?

  1. A writ under section 105 of the Real Property Act 1900 does not create an interest in land, however, it allows for an involuntary sale of a judgement debtor’s property to be compelled for the fulfilment of a judgment or order.
  2. A writ will allow the Court to sell the estate or interest while the writ is current and ensures that the interest affected cannot be disposed of by the judgement debtor within the initial 6 month period from the registration of the writ.
  3. A writ is current for 12 months from the date of issue by the Court, after which time it will lapse.
Removal of a writ
  1. The Registrar-General may, on their own motion, cancel a writ where a transfer of the land, estate or interest pursuant to a sale under the writ has occurred or the writ expires.
  2. Thus, there is no obligation for a judgement creditor to remove a writ where the transfer of the land pursuant to a sale under the writ has occurred or the writ lapses.
  3. A writ may, and probably should, be withdrawn if the writ has not been executed by the sale of land because it has otherwise been satisfied.
The cancellation of a writ
  1. A writ can be cancelled under section 105D of the Real Property Act 1900 where an application for the Cancellation of the Recording is made in the approved form.
  2. The Registrar-General will cancel the writ where the application is accompanied by a withdrawal of the writ signed by the judgement creditor and a statutory declaration has been provided that the writ has been satisfied otherwise than by sale of the land to which the application relates.
  3. A person may also apply for a writ to be cancelled where the writ has lapsed after 12 months.
  1. A priorities notice may be lodged under section 74T of the Real Property Act 1900.
  2. Priorities arise where multiple parties with competing interests in land require the Court to determine the priorities of the interests.
  3. In determining priorities:
    • Registered and subsequent registered interests: The common approach is that the priority will usually be determined by the date in which the interest was registered;
    • Registered interest and subsequent equitable interest: The approach for a registered interest and a subsequent unregistered interest (equitable interest) is that the registered interest is indefeasible;
    • Unregistered interest and subsequent registered interest: the party with the unregistered interest may have had an interest in the land before the subsequent registered interest; however, unless there is evidence of fraud or an overriding interest, in most instances, the registered interest will have priority;
    • Multiple unregistered interests: generally the party who had the interest in the land first will prevail if there is a dispute.

The issue of costs for removal of caveat and/or writ are more complicated and depend upon the circumstances in each case, including but not limited to, whether there was a proper basis to be placed in the first instance and any contractual entitlements to such costs.

The content of this article is intended to provide a general guide to the subject matter. Specific advice should be sought about your specific circumstances.

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