Dealing with unpaid debts is stressful, and you may be contemplating if there are ways to secure your interests. One of the legal instruments that comes to mind is putting a caveat on the debtor’s property. But is this possible under NSW law? What exactly does “caveatable interest” mean? Let’s break it down.
What is a Caveat?
A caveat is a legal notice registered against a property’s title, essentially ‘flagging’ that you have a claim over the property. This prevents the property from being sold, transferred, or mortgaged without your knowledge.
Can You Caveat Someone’s Property if They Owe You Money?
It depends on the circumstances. Generally, you cannot simply lodge a caveat because someone owes you money. You must have a “caveatable interest” in their property.
What Constitutes Caveatable Interest?
A “caveatable interest” refers to a legally recognised claim or entitlement over the land in question. It must be an estate or interest in land.
There does not appear to be a comprehensive list, but examples of caveatable interest include:
- Mortgage: Where you have loaned someone money in return for an interest in their property as security for the loan.
- Contract for sale: Where you are buying a property under a contract for sale.
- Option to purchase: Where you hold an option to purchase someone’s property.
- Agreement for lease: Where you have entered into an agreement to lease a property but have not yet taken possession.
- Vendor’s lien: Where you have sold a property and allowed the purchaser to pay by instalments.
What Happens if You Lodge a Caveat Without Caveatable Interest?
Lodging a caveat without a caveatable interest can lead to serious legal consequences. Not only can your caveat be removed, but you might also be liable for any damages or losses incurred by the property owner.
A solicitor who prepares a caveat where there is no caveatable interest may be guilty of professional misconduct under the Legal Profession Act 2004.
What Should You Do Next?
If someone owes you money and you believe you have a caveatable interest in their property, you should consult an experienced property lawyer to guide you through the appropriate steps to secure your rights.
While lodging a caveat on the borrower’s property may seem like an easy course of action, the laws in NSW require that you have a legally recognised interest in their property to do so.
If you are unsure about whether you can put a caveat on someone’s property, or explore other ways to recover your money, contact us today to discuss your options.
