We had a client asking if they could put a caveat on their debtor’s house as a means of recouping their debt. I did some investigating into this for them and found that placing a caveat on someone’s house is not a simple process.
Firstly the person you are doing the work for must be the same person who owns the house and if there are joint owners both must agree to the caveat. Not only that, the work must have been done on the property, meaning there must be caveatable interest in the land.
Interests that do not give you a caveatable interest over the land are debts that are not involved with the land or have any other contractual rights in that particular piece of land. This means that if you did a job on someone’s car or sold them items through a store you cannot put a caveat over your debtor’s property.
The best method of protecting your interest is through the PPSR (personal property security registry). However, this must be done prior to the sale and your customer must sign a trade agreement with you, giving you permission to pass their information onto the PPS register.
You cannot do it after you have sold them the products. It’s too late then, it like closing the gate after the horse has bolted.
When it comes to a caveat the item owing must be part of the land and directly related to the owner of the property.
The following is an exert from the legal aid website which outlines what a caveat is and the implications of using this as a means to secure a debt payment. Using a caveat is not a simple way to complete the debt collection process.
"What is a caveat?
A caveat is a notice registered on a certificate of title (a "registered interest"), that prevents dealings (eg buying, selling, registering a mortgage) with the land. A person who registers a caveat is known as a "caveator".
A caveat acts as:
• a warning of an equitable interest in land
• a statutory injunction.
A caveat can only be used to protect an interest in the land. It does not give a proprietary interest in land.
To lodge a caveat, the caveator (the person who takes out the caveat) must have a caveatable interest in the land, in other words, an estate or interest in the land. The types of caveatable interests are varied and complex. Generally, a claim should arise through a dealing with the registered proprietor.
You should get legal advice before lodging a caveat. There are costs consequences. You can now lodge a caveat (improper dealings) with Landgate to help reduce the risk if improper dealings with your property. Once lodged this caveat will stop the registration of any instruments such as transfers, mortgages or leases that would usually need to be signed by the owner. If there is more than one owner, all owners of the property must want to lodge this caveat.
If you are an owner who has a mortgaged property you should check your mortgage terms and contact your lender before lodging a caveat (improper dealings) as you may not be able to do so without the consent of your lender.
Fees are payable to lodge a caveat.
How can a caveat restrict dealings with land?
A caveat can act as an injunction to prevent the Registrar of Titles from registering any instrument either absolutely, or until after notice of the intended registration or dealing be given caveator, or unless such instrument be expressed to be subject to the claim of the caveator.
Always seek legal advice before registering a caveat over another person's property.
If you have been served with a notice from the Registrar of Titles about a caveat you have lodged you require urgent legal advice, as time limits to respond are short.
How does the registered proprietor know about the caveat?
The Registrar of Titles (at Landgate) has to give notice to the registered proprietor that a caveat has been lodged against their property.
What if someone gets a caveat without a reasonable reason?
If a caveat is lodged without reasonable cause, the Supreme Court can order payment of compensation for damage caused. Get legal advice.
How can a caveat be removed?
A caveat can be withdrawn at any time by the person who lodged it (the caveator).
The registered proprietor, (or any person claiming under an instrument signed by the registered proprietor) can apply to court for the removal of the caveat.
In cases where it is clear that the caveator has no caveatable interest in the land, the registered proprietor may apply to the Registrar of Titles (at Landgate) to remove the caveat.
There are different requirements for the lodging and removal of a caveat (improper) dealings. See the Landgate website for more information."