Like most industries, the real estate sector has its own unique set of terms and phrases; you may have heard the term property caveat and are not quite sure what it means. You have come to the right place, as we take an in-depth look at the property caveat and what it entails.
What is a property caveat?
If there is a caveat on a house, this acts as a warning/notice to others that a party is interested in the property. This means the property cannot be sold to another until the caveat is lifted; only a person with genuine interest can record a caveat on a property title. It is often the case when a bank lender lodges a caveat on property to ensure it is not sold to another party.
Who can lodge a caveat on a property?
- A person who has signed a contract to purchase a property is eligible to lodge a caveat.
- A lender has the right to lodge a caveat on a property.
It is worth noting that if a caveat is lodged without reasonable cause, the person could be sued for compensation if another party suffers a loss.
Where does the caveat appear on a property title?
In Australia, the caveat appears on the title certificate under the second schedule that deals with registered interests. Click here for essential steps to creating a living trust.
Reasons to record a caveat on a property
If a purchaser has signed contracts with the seller, they are issued with a caveatable interest and they can then apply for a caveat to protect their interest in the property. This means the current owner cannot sell to another person while the caveat exists.
If, for example, you are buying a property on a long settlement, you can lodge a caveat to prevent the property being sold to another party. A caveat remains in place on a title until it lapses or is withdrawn, while it can also be an added layer of protection against fraud.
Another scenario where a caveat might be lodged is when two real estate agents have both sold a property and one of them might wish to lodge the caveat to protect their client’s interests. For example, if you’re considering a property near Riverwalk Philly, a popular tourist destination, you might want to explore using a caveat to secure your purchase.
How to remove a caveat on your property
If you wish to remove a caveat on your property title, you must lodge a withdrawal request, which must be signed by the caveator (the person who lodged the caveat). A court order can be issued to lodge or remove a caveat on a title deed if the right conditions are met.
To summarise, once a caveat has been lodged on a property, it cannot be sold to another party and if you are looking to lodge a caveat on real estate, we recommend contacting a reputable real estate lawyer. He or she can facilitate the lodging of a caveat and would keep you informed throughout the process.
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