What are they and how do they work?

When a relationship breaks down in Queensland (whether it be matrimonial or de facto), it is often the case that a caveat needs to be registered against a property which forms part of the net asset pool available for division. A spouse or de facto who feels uncertain about the security of his/her share in the relationship’s properties sometimes resorts to lodging a caveat on the certificate of title.[1]

In a nutshell, a caveat is a formal document known as Form 11, to be lodged at the Titles Office with the Department of Natural Resources and Mines against real estate in Queensland. [2] The purpose of this is to stop the legal owner (and any other person) from selling the property or further registering other instruments against it, such as a loan/mortgage. It also stops the legal owner from being able to transfer the property to another person.[3]

Why Lodge a Caveat?

It is common for a property to be registered in one party’s name alone (the “registered owner”). That property may have been brought into the relationship by one of the parties or for tax/commercial purposes. Whatever the reason, lodging a caveat is to protect the interests of the party who is not on the title (the “other party”).

Person who may lodge a caveat[4]

Pursuant to s 122(1) of the Land Title Act 1994 a caveat may be lodged by:

• a person claiming an interest in a lot;

• the Registrar;

• a registered owner of the lot;

• a person to whom an Australian court has ordered that an interest in a lot be transferred

• a person who has the benefit of a subsisting order of an Australian court in restraining a registered proprietor from dealing with a lot; and

• an interest holder in a water allocation who has given notice under s 101(1)(b) of the Water Act 2000.

A person claiming an interest in a Lot[5]

Pursuant to s 122(1)(a) of the Land Title Act 1994, a person claiming an interest in a lot may lodge a caveat. The caveator must identify an interest in the lot in the caveat. Section 122 of the Land Title Act 1994 replaces s 98 of the Real Property Act 1861. Pursuant to s 98 of the Real Property Act 1861, a person with ‘an estate or interest in any land’ had a right to lodge a caveat. There are many cases which discuss exactly what constitutes ‘an estate or interest in land’. In the drafting of the Land Title Act 1994, the term ‘interest’ has been substituted for ‘estate or interest’ as used in s 98 of the Real Property Act 1861. The term ‘interest’ is defined in s 36 of the Acts Interpretation Act 1954 for which a land or other property is considered ‘a legal or equitable estate in the land or other property; or a right, power or privilege over, or in relation to, the land or other property’.

In summary, such caveat would be lodged in circumstances where the other party wishes to negotiate property settlement matters with the registered owner. This is especially the case where the other party is worried that the registered owner may sell, transfer, or encumber the property so as to attempt to defeat the other party’s property settlement claim.[6] For example, despite the fact that the parties in question may have been married for twenty years, if the former matrimonial home is registered in one party’s name, the registered owner is entitled to list the property for sale and proceed with sale, even without the other party’s consent. The only way to stop that from happening is to lodge a caveat, or obtain a Court Order. Lodgment of a caveat is far less expensive (a few hundred dollars in registration fees) compared to seeking a Court Order which can cost thousands of dollars.

 

 

[1] Land Title Act 1994, ss 121 to 131.

[2] Land Title Act 1994, ss 121.

[3] Land Title Act 1994, ss 124.

[4] Land Title Practice Manual  - Department of Natural Resources and Mines – accessed on 28th  July 2016 – <https://www.dnrm.qld.gov.au/__data/assets/pdf_file/0003/97149/ltpm-part-11.pdf >

[5] Land Title Practice Manual  - Department of Natural Resources and Mines – accessed on 28th  July 2016 – <https://www.dnrm.qld.gov.au/__data/assets/pdf_file/0003/97149/ltpm-part-11.pdf >

[6] Land Title Act 1994, ss 121(b)(ii).

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