Caveat on property purchase

[rubyren]

I am in the middle of purchasing a property which has had a caveat on it. The caveat has been in place since mid-2009. The caveat is in relation to money owed to the caveator by the owner of the property, which actually totals more than the property's current value.

There was a court order in June 2012 to list the property for sale, and have the caveat withdrawn. I found the property on realestate.com.au in mid-August (I found it as a new listing). Upon getting the contract from the agent, is when I found out about the caveat being on the property.

My solicitor said the caveat needed to be removed before exchange of contracts. So the estate agent started the process of getting it removed.

I did a title search just yesterday and the caveat IS now removed for certain. I also did a history of title search which shows it was removed late September.

Now.... just a day or two before exchange (which was supposed to happen today), my solicitor has raised concerns that the method of the removal of the caveat was possibly not legal. The estate agent got the OWNER'S solicitor to fill out a Withdrawal of Caveat form and submit it to the LPI office in Sydney. So it was NOT done by the caveator, or the caveator's solicitor.

The solicitor who did submit the form apparently got advice at the time as to whether he could do this or not, and he was advised by a barrister that it was OK (again, only apparently, this is what I was told from the estate agent).

But my solicitor still has concerns over the way it was done. He thinks that what was done was possibly still not legal. We also think that the caveator himself does not even know that it has been removed. By the way, he had taken no action since the court order to remove the caveat.

So, did the withdrawal of caveat form absolutely have to be submitted by the caveator or the caveator's solicitor to be legal? Does the caveator have any possible grounds to sue me as the new owner, or take this back to court after i have moved into the new property? Even now that the caveat has been removed?

 

[Terry_w]

A quick look at a withdrawal of caveat form will give you the answer.

But then you have to ask if the solicitor still the solicitor of the caveator? Do they have authority to withdraw?

 

[rubyren]

A quick look at a withdrawal of caveat form will give you the answer.

But then you have to ask if the solicitor still the solicitor of the caveator? Do they have authority to withdraw?

I never saw the form that was submitted or what was written on it, as it was done in Sydney by the owner's solicitor. I have had a look on the template form on the LPI website but I don't see anything to answer my question.

What happened was - the agent contacted the owner's solicitor about this. Then the owner's solicitor must have called the caveator's solicitor, apparently asking if the caveat was still in effect.

What happened then was this owner's solicitor filled out the withdrawl form himself and took it to the LPI in sydney and submitted it. And the caveat was removed from the title only a day or two afterwards, because i did a title search and it no longer shows the caveat.

But I do not think there was permission FROM the caveator or the caveator's solicitor to do this, and i don't think the owner's solictior actually asked for permission either, he just did it himself.

This is where the possible issue is. The question is, is there any risk for me from what happened? If the caveator is made aware of how it was removed? I assume he does not even presently know that it has been removed.

 

[Terry_w]

So the owner's solicitor removed the caveat without permission of the caveator. They would not have authority to do this. However maybe the caveat had lapsed.

Why not ask your lawyer for advice on this matter?

 

[rubyren]

But what about the court order saying it needed to be withdrawn? Was it not supposed to be removed anyway?

The problem is, I was not made aware of *how* this was done, until it was already done. I do not know why the owner's solicitor did this instead of the caveator or his solicitor.

 

[Terry_w]

If there was a court order then that changes things. Assuming the order was to remove the caveat then you probably have nothing to worry about.

What does your lawyer say about this?

 

[Aaron_C]

This sounds pretty messy. Usually in property law a transfer of land is indefeasible unless there was fraud involved.

 

[rubyren]

If there was a court order then that changes things. Assuming the order was to remove the caveat then you probably have nothing to worry about.

What does your lawyer say about this?

I have a copy of the court order, it says:

11. The caveat number AExxxxxx lodged in relation to the property be withdrawn.

But in in the 4+ months since the court order, the caveator had done nothing. It is possible he had no intention of removing it either. I cannot find any mention on the court order as to any specific period of time given for him to remove it. What period of time would he normally be given by the court to remove it?

I also have a copy of the original caveat, which is actually AExxxxxxB, whereas the court order only says AExxxxxx without the 'B' at the end... not sure if that means anything...

I think I will be getting legal advice about this early next week.

However, exchange of contracts is going ahead on Monday from what I hear ... I have already given my solicitor the deposit cheque for the property purchase, the solicitor did not seem concerned enough about this problem to the extent of putting off exchange... but he has not made a settlement date yet because of this. I think he wants it 'resolved' somehow before settlement but I have no idea how. The estate agent of the property is not being overly helpful now either, he is sick of hearing about it. Now that the caveat is removed he doesn't really want to know about it anymore.

 

[rubyren]

I might also add that early on, my solicitor made it very clear to me that the caveat had to be removed before he would let exchange happen... that is why I contacted the agent about getting it removed, so the agent handled that by contacting the owner's solicitor and them submitting it, and I only found out about how it happened after the form was submitted.

The owner's solicitor did know about the court order though, and apparently sought advice about this from someone before he did it, and was told that it was allowed.

It's only my solicitor who is raising the concerns about the fact it was not the caveator or his solicitor who did it.

 

[Terry_w]

You have a court order that the caveat be removed. This should be enough for the land titles office to remove it validly.

You should also add special conditions in the contract re this.

 

[rubyren]

So because of the court order, the normal rules in terms of who can remove a caveat do not apply?

The LPI website and several other sources say that ONLY a caveator or caveator's solicitor (or someone representing him) can withdraw a caveat.

Again, the caveat is already removed now... it is just the actual person who removed it that my solicitor is concerned about. In other words, the caveator possibly later claiming that he did not authorise it personally to come off being a problem, since it was not done by his solicitor.

 

[Terry_w]

courts have the power to order various things whether this situation will depend on the court and who it ordered.