Getting in Trouble for Lodging a Caveat on a Property
Putting a caveat on a property is not little matter.
You’re only entitled to lodge a caveat on a property if you have a caveatable interest in the property.
Many people think that caveats can be used as a kind of security for money that’s owed, but that’s not the case.
Actually, someone only has the right to lodge a caveat … if they have an equitable right, or a written agreement giving a charge over the property or security in the real estate.
Just because a builder is owed money for a renovation doesn’t give him the right to put a caveat on the house he improved.
Just because some other services were provided to a homeowner, doesn’t mean that the costs for those services can be secured against the property.
A court proceeding also does not give someone an interest in land.
Professionals are also getting in trouble for lodging caveats without grounds on behalf of clients.
In a recent case in VCAT in 2022, a Victorian solicitor lost their licence to practice for facilitating the lodgement of a caveat for a friend of hers, when she knew her friend did not have a caveatable interest. It was found to be professional misconduct, and that “the caveats were clearly prepared and lodged as a bargaining chip and for an ulterior or collateral purpose.”
In a case a little bit older, in 2019, the Supreme Court of New South Wales awarded costs against the lawyer, because:
“ … lodging a caveat is not a trivial act to be undertaken lightly. It has immediate legal effect and can have significant commercial and financial consequences. Legal practitioners and conveyancers … have an important role to ensure that obviously unmeritorious caveats are not lodged…”
And yet another case in 2020 in NSW against a solicitor, who also had their licence suspended, for lodging a caveat on a Victorian property on behalf on someone that she spoke to on the phone before verifying identity or reviewing the alleged documentation under which the right allegedly arose (which turned out there was no right to a caveat).
TBA Law is currently handling 4 tricky caveat matters.
Two of these matters are caveats that have been lodged by sons onto their respective elderly mother’s properties. Their reasons for putting caveats on the properties are varied, and questionable. Both have caused intimidation for our elderly female clients, and strain on family relationships.
Another caveat, we’re about to go to the Supreme Court to remove. This caveat is likely to be legitimate, but the caveator is refusing to tell us what the amount of money is that he wants to remove the caveat. So we can’t sell the property with a caveat registered, because we can’t settle.
The final matter is another professional who put a caveat on a property that our client was selling, so that they would get their fees. They used the caveat as a threat to hold up the sale, and required payment of their invoice before they would remove the caveat. The professional did not have a caveatable interest in the property, but because of the time constraint with a pending settlement, the disputed invoice was paid.
It’s this fourth matter is very much like those ones that have been to Court recently, with professionals getting in trouble for lodging caveats without proper grounds. So there may yet be penalties.
Beware of a hasty caveat, and check that you actually have the right to lodge one!
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