Caveats Property Family Law
The word “caveat” derives from the Latin “cavēre”, which means “to be on guard”. A caveat on a property warns people that there is an interest attached to the title for the property. In the event of the dissolution of a relationship, a family law solicitor may advise a client to lodge a caveat against property that is part of the marital assets but that is held solely in the name of the other spouse. This prevents the spouse from making unilateral decisions about the property. This article examines the reasons why a family law solicitor will advise a client to lodge a caveat on property and the process of lodging a caveat in Australia.
What Circumstances Require a Caveat?
There are several reasons for a property that is a marital asset to be held solely in the name of one spouse. The property may have been purchased prior to the relationship, inherited by one spouse, or held by one spouse for security or taxation purposes. It is important to acknowledge that even when one spouse owns a property, it still forms part of the pool of marital assets. This applies even if the asset was acquired well before the beginning of the relationship.
When a marriage or de facto relationship breaks down, the division of assets is often a fraught process, complicated further if only one spouse is the sole registered owner of a certain asset. The registered owner of a property can take actions without the permission of the other spouse. They can sell the property, transfer title to someone else, or use the property as collateral in a loan. If someone is concerned that their spouse will take any of these actions, they can lodge a caveat on the title, effectively freezing the asset from any changes, while a division of assets is negotiated and finalised.
How Does a Caveat Work?
A caveat is a legal order giving notice to the state or territory Registrar of Titles that there is an “interest” in the property. The authority for this statutory injunction is state legislation, for instance in Queensland the Land Title Act 1994 governs caveats. The caveat remains attached to the title for three months, during which time the caveator must initiate a court proceeding and inform the Registrar of Titles when this action commences. If the caveator fails to comply with this stipulation then the caveat will lapse, and the registered owner can once more freely deal with the property.
Who Can Lodge Caveats on a Property under Family Law?
This is a complicated area of law and it is best to consult a solicitor on the specific circumstances of a case. However, there is some commonality that can be observed in relation to caveats in property and family law. For instance, the fact of being a partner in a marriage or de facto relationship is not in itself grounds for lodging a caveat on a property owned by a spouse. A more persuasive argument is that the spouse has previously made financial contributions to the property, whether through mortgage repayments or renovations. Non-financial contributions (such as childcare and household duties) to the asset pool of the marriage will also be considered in the equation. Based on these criteria, it is likely that a spouse would be able to reach the required standard to lodge a caveat on property. Of course, caveats should not be lodged frivolously, or simply to impede or irritate a spouse. Caveats should only be lodged to protect the legitimate interests of a person, such as during a family law property settlement.
Removing a Caveat From a Property
There are several ways that a property owner can respond to a caveat placed on a property title.
The registered owner of a property can apply to the Supreme Court to have the caveat removed. The owner can request that a court hearing takes place more urgently, within 14 days, instead of the standard three months. The court will consider whether the caveat was placed for a legitimate purpose, and will determine whether the caveat needs to remain to protect that interest. If it is found to be a frivolous claim, the caveator (lodger of the caveat) may be liable to compensate the registered owner for any financial loss they suffered as a result of the caveat.
The lodger can withdraw the caveat if they no longer wish to proceed, hopefully, because they have been able to come to a fair agreement with their spouse over the division of marital assets.
The caveat will automatically lapse if court proceedings do not commence in the mandated time frame. This may be the simplest way to proceed, as the caveat can be allowed to lapse when a property division agreement is reached.
Lastly, the Supreme Court can order the removal of a caveat, or the registrar of the title office in the relevant jurisdiction can remove it without the requirement for a court order.
Armstrong Legal’s family law experts can help you to lodge a caveat on property owned by your former spouse, and advise you about any other matters relating to the division of property after the breakdown of a de facto relationship or marriage. Please call Armstrong Legal on 1300 038 223 or email to make an appointment.