Staking your claim - a quick guide to caveats

Caveat is a Latin word meaning "let him beware". While the legal profession uses the word in a range of situations, the one with which most people are familiar is when a caveat is said to be placed on somebody's title to land.

What is a caveat?

A caveat is a tool you can use to protect your interests against a person who owns real property; that is, who owns land.  Under the Transfer of Land Act 1893 (WA) you can lodge a caveat with the Registrar of Titles. This means your interest will be noted on the title. If the owner of that land tries to transfer it to someone else such as by selling it, you will be notified of the event and it will not be possible for the transfer to be registered until your interest has been dealt with.

For example, if you and a land owner enter into a contract for renovations of a house on that land and your contract acknowledges your right to do so, you might lodge a caveat for unpaid money.  If the owner tries to sell the house, the title can't be transferred until your disputed payment is settled and the caveat is withdrawn. Otherwise, it might remain against the title!

When else might I use a caveat?

A caveat might also be used if you have a contract with someone for the provision of goods and your contract includes a Romalpa or retention of title clause.  This clause allows you to enter someone's property and retrieve the unpaid goods.  However, if these goods are affixed to the land (such as when you supply and fit plumbing fixtures) this isn't practicable so a caveat may be  lodged to record your interest in the land until the payment dispute is settled.

Is lodging a caveat that simple?

No. A land owner's title is protected from people lodging caveats that can't be justified.

So what should I do?

You need to make sure that the land owner and the person who owes you money are the same person. If this is not the case then you may encounter problems with your lodgement,

In a recent case[1], a landscaper was owed money on a contract he had made with a contractor who had since gone into liquidation before paying for most of the work.  The landscaper's terms and conditions gave him the right to enter the premises and retrieve the goods supplied. However, as some of the goods supplied had become a part of the land, the landscaper lodged a caveat over the land on which he had done the work.  Unfortunately, the owner was a third party and not the contractor. Neither the owner, nor the owner's agent, knew of the Romalpa clause in the contract - this was one of the factors two of the judges commented on when they decided the caveat should not be extended.

If you want to lodge a caveat, or if you're not sure about your contract or the identity of the owner, it is always best to obtain legal advice. A correctly lodged caveat by a legal professional will ensure the caveat achieves its purpose. 

How do I do it properly?

You need to complete a caveat lodgement form which is available from Landgate. You may also need to make a statutory declaration setting out the nature of the interest you are claiming - if you don't lodge a statutory declaration when required, the caveat will have no effect.  After the caveat is registered with the Registrar of Titles, the Registrar will contact the landowner to give notice of the caveat.

The landowner can then summons you, the caveator, to appear before a judge of the Supreme Court where you will have to explain why the caveat should not be removed.  This is where getting legal advice will start to pay off.  The process can move quickly and if you are prepared ahead of time, this will help to make the process less stressful. 

In the case mentioned above, the landscaper was able to convince the Master of the Court, who heard the first application, that the caveat should be extended.  The Master gave a series of orders to ensure that the issue in dispute was brought to trial but the landscaper didn't follow these steps.  The landowner then asked the Court of Appeal to reconsider the extension.  Two of the three judges agreed that the caveats should not be extended.  This meant, the caveats would cease to have any effect.

The lesson to learn from this is: don't assume the caveat alone will solve the issue; you still need to take the necessary steps you need to settle the original dispute.

What if someone lodges a caveat on my land?

The Registrar will advise you about the caveat when it is received.  It is advisable to obtain legal advice to make sure you are able to take the right steps to have the caveat removed.  Alternatively, that legal advice may help you solve the dispute that lead to the caveat being lodged in the first place.

A caveat can be a useful tool in protecting your interest; however, it is not a resolution to your dispute with the landowner about payment for work done or goods received.  This dispute still needs to be resolved.  What a caveat will do is to give you some peace of mind that your interest in the land will be protected if the landowner tries to sell the land before the dispute is resolved.

A final word

Although it may appear to be relatively simple to lodge a caveat in the first instance, a party who subsequently has a caveat removed may find itself liable to the landowner for any loss suffered as a result of a wrongly lodged caveat.  Make sure you take advice as to whether your claimed interest is truly caveatable. If it isn't, you may be paying damages to the owner for any loss caused by the caveat.

[1] Perron Investments Pty Ltd v Tim Davies Landscaping Pty Ltd [2009] WASCA 171