Withdrawal of Caveat?

[rupert11]

Hi all,

First time poster, long time reader.
Looking for some advice regarding withdrawal of a caveat.

I own an IP in QLD with my brother. My brother has since split with his wife, resulting in said ex-wife lodging a caveat over our QLD IP by advice of her solicitor. (In her solicitor's words, "merely to only notify her should the property be sold and nothing more").

Now we have a buyer for the property.

Distribution of proceeds of sale has been agreed upon by way of court orders by all parties, so no issue there.

When our REA saw the caveat appear on the title search, he asked us to get in touch with caveator's side to see what's the go and can it be lifted asap. We contacted cavetors' solicitor and they assure us the caveat will be "automatically" lifted UPON settlement, it was only put there as a tool to notify the ex-wife should the property be sold.

Our REA said the buyer's solictor will put a clause in the sales contract that the caveat MUST be lifted PRIOR to settlement.

I have spoken with the caveator privately, who is happy to sign and lodge the form to withdraw the caveat plus pay the fee privately if need be. She does not want to pay her solicitor to do it if it can be avoided, as she has already spent a lot of money on him.

I feel like her solicitor has deliberately worded his answer without disclosing the costs associated with withdrawing the caveat and wants to give the impression it will "mysteriously disappear" upon settlement with no mention of the fees associated with this process.

So if she lodges the form by herself, she would be paying $160.40 (we are interstate). If she leaves it to her solicitor (and low and behold they have to lodge a proper form for withdrawal of the caveat), I'm sure they will charge her the $160.40 + their legal advice + preperation fees + time to lodge + licking the envelope etc etc.

Am I right in saying that in order to release ANY caveat (regardless of the reason behind it) the appropriate forms would still have to be lodged and paid for with the titles office? It will not "automatically go away" when the property settles as stated by the caveator's solicitor.

If that's the case, the caveator would much rather do it privately so:

1). We can assure it's done well before settlement and there's no chance of delay or any other complications relating to the caveat
2). Caveator will save on unecessary further legal cost if their solicitors are just going to fill in the same form

I have already downloaded the caveat withdrawal form for her and it is quite a simple form to fill in.

Appreciate any thoughts.
(Apologies for the essay ).

Cheers,
rupert11

 

[Aaron_C]

rupert,

The caveat will not be automatically removed when the property settles. The only exception to this is if the caveator is the same person as the purchaser. In any case, the purchaser is perfectly entitled to ask for the caveat to be removed prior to settlement and it MUST be removed in order for the sale to come through. If anything, I suspect the solicitor is advising your brother's ex-wife in that way because he wants to make sure he gets his fees paid out from the sale. This is very common practice from lawyers.

 

[rupert11]

Hi Aaron_C,

Thanks for your response and advice. I'll advise her to go ahead and lodge the withdrawal form privately so we can all have piece of mind at settlement.
I never trusted what her solicitor told us, so I'm glad I've got some reassurance now.

Cheers,
rupert11

 

[Kristine..]

Hi Rupert

Welcome to the Forum

I am doing 2 x applications for refinance at the moment, 1 x Reverse Mortgage where a family member has lodged a Caveat, and 1 x Family Court where the separated spouse has lodged a Caveat

No lender will proceed with an application for finance where there is an active Caveat, unless suitable letters or forms are included regarding the removal of Caveat are included with the application. I make sure that each application includes letters and / or unsigned Removal of Caveat forms to flag to the lender that the Caveator will be removing the encumbrance on or before settlement of the property.

But if the property is being sold, it is no big deal. Your Solicitor /Conveyancer includes the appropriate Searches in with the Vendor’s Statement / Declaration, and the purchasers’ Solicitor / Conveyancer searches the Title and the Caveat and makes sure that the settlement day adjustments includes provision for paying out any amount secured by the Caveat and payment of the relevant fees.

By your description, the ex-wife has no material or financial interest in the subject property save that it formed part of the previous matrimonial estate, and any dealing with the property would have had to have been notified to and agreed to by her

If the matrimonial estate has now settled and she has no further interest in this property, and it is of no consequence to her what happens to it, then she can certainly lodge the appropriate Removal of Caveat forms herself without disadvantage to her.

Of course, we must always look out for our own best interests. Sometimes, this can put us in conflict with others – eg the division and distribution of a matrimonial estate. But it is human nature that once the dust has settled it is easy to forget that there may be loose ends to tie off – removing caveats from property we have no further interest in – and the ex-wife is behaving very politely in agreeing to remove the obsolete caveat as quickly as possible.

Because – and you guessed it – without the correct forms and payment of the appropriate fee, the caveat will not evaporate and may very well delay settlement, possible leaving a family sitting out in the street with the removalists offloading their furniture on to the nature strip if the caveator was not able to be found or at the last minute refused to sign the Removal of Caveat forms

And yes, a customer of mine with a 15 month old baby and a van full of furniture found themselves in the street one Friday afternoon with the lender refusing to settle on a technicality, and no new home for them until the Monday!

You are doing well to get it all organised well in advance and to do so with respect and amiability - but seriously, Rupert, I would go easy on the use of the word 'advice' or 'to advise'.

You are not in a position to advise anybody about anything. About the best you can say is that in your opinion, or that she may care to consider, or that she could ring the Titles Office etc

Your 'advice' could well be taken as undue influence. You have done well so far, carry the diplomacy a bit further bt it is entirely her decision. The Caveat was lodged for a reason, and you may not be fully aware of the whole of the reason. It may have just been a precautionary procedure, but there could have been circumstances that were not made public.

So suggest, sure, but don't 'advise'. No, wait, you can suggest, but I would invite you to consider how you phrase the request or suggestion of removing the caveat when communicating to the lady in question.

Cheers
Kristine

 

[missgreeneyes]

I got a bit lost but I just wanted to say - I seem to recall my lawyers informing me when I settled that a property could not be sold if there was a caveat on it.
So although this thread kind of flew past me I just wanted to let you know you may wish to get that cavear struck off by hook or by crook before you buy it, or you may never be able to offload it later.

 

[Aaron_C]

It comes down to the principle of indefeasibility of title within property law. On a certificate of title it is presumed that the registered proprietor of the land is the full owner, subject to any encumbrance like a mortgage. The presence of a caveat indicates that the title is NOT clear and therefore it has to be removed before any mortgagee or new purchaser will ever effect a transfer of title. No ifs or buts.

 

[Terry_w]

The caveat just notifies others that the caveator has an interest in the property.

In this case the wife will be, probably, waiting on funds which could be coming from the sale of the property and she will therefore probably not be removing the caveat before settlement as her chances of getting paid will greatly diminish.

What will probably happen is that the forms are drawn up and handed over at settlement so that the withdrawal of caveat can be withdrawn before the transfer is registered - or at the same time really. It is like the discharge of mortgage - doesn't happen before settlement but at.

 

[rupert11]

Thanks all for your input. We certainly want to make sure there is a clear title for the buyer at the time of settlement in order for the sale to follow through. I just needed clarification on what form/fees needed to be lodged and by whom in order to get it properly lifted.

And yes, I admit poor use of the word "advise", I can only merely suggest what she could do, and luckily for us she is willing to co-operate.

Yes by way of a court order, she is entitled to a percentage of what my brother gets out of the sale. (He and I own 50/50). Whatever's left after discharge of the mortgage/other fees etc, is going straight to her solicitor and they will distribute the funds accordingly and as agreed by all parties. So whether she lodges the caveat withdrawal now or her solicitor hands over the papers at settlement she needn't worry about getting what she is entitled to, as the money is not even going to touch mine or brother's hands first.

Admittedly, I can be a worry wart sometimes and this property has given me a headache (another story for another day), it's been quite hard to sell. So I just wanted to make sure everything was done the right way, the first time.

Thanks again all,
rupert11

 

[Kristine..]

Rupert

Now that you are disclosing more of the story, stay well away from this

Your ‘suggestion /advise/coercion’ for the ex-wife to lodge the Removal of Caveat without her Solicitor’s knowledge and possibly to her disadvantage could be seen by the Court very disfavourably if anything went wrong between now and distribution of funds

She / her Solicitor will make the relevant Removal of Caveat forms available, in the usual way, to the incoming purchaser at settlement

Stay out of this. It is not your concern. You are exerting an unnecessary influence over her and this may go against your brother if there was any dispute about influence or behaviour. The Caveat will be removed in the usual way at the usual time. There appears to be no hindrance to the completion of the sale and you are letting your worry get the better of your good judgement.

Regards

 

[rupert11]

Hi Kristine,

I see. I always had good intentions but now I can see how it may not look that way. I never thought about it like that. So I'll stay out of it.

I'll let her know that she'll have to let her solicitor handle it and I'll just have to trust that will be done at settlement.

Cheers,
rupert11

 

[NedKelly]

You cannot lodge a caveat, "merely to only notify her should the property be sold and nothing more". There must be more to it than that. To lodge a caveat you must have an equitable interest. If the property is only in yours and your brothers name then unless there is some other written agreement I don't think she has an equitable interest. What does the court order say?

Whatever you do, leave it to your lawyer to sort out and has been previously suggested, I would certainly stear clear of talking to the ex-wife.

 

[Terry_w]

Y If the property is only in yours and your brothers name then unless there is some other written agreement I don't think she has an equitable interest.

What if she helped pay the loan or painted the toilet yellow for example? She may have constructed a granny flat or an outside toilet. She may have an interest under the family law act - being an asset of the marriage.

 

[boomtown]

Rupert has said she is entitled to a part of the proceeds. This is a normal matrimonial issue to be cleared at settlement when she gets her cheque.

 

[NedKelly]

What if she helped pay the loan or painted the toilet yellow for example? She may have constructed a granny flat or an outside toilet.

None of that will give her an equitable interest, especially if she used yellow paint for the toilet.

She may have an interest under the family law act - being an asset of the marriage.

Except she is now an ex-wife, it depends what the court order says. The point is you cannot lodge a caveat, "merely to only notify her should the property be sold and nothing more". If this is what her solicitor "advised" her he is wrong or the ex-wife is not telling the whole story.

 

[Terry_w]

None of that will give her an equitable interest, especially if she used yellow paint for the toilet.



Except she is now an ex-wife, it depends what the court order says. The point is you cannot lodge a caveat, "merely to only notify her should the property be sold and nothing more". If this is what her solicitor "advised" her he is wrong or the ex-wife is not telling the whole story.

I agree that you have to have an equitable interest to lodge a caveat (except in tasmania i hear) but have to disagree on the other.

Someone can gain an interest in a property by paying for that property. If the title is in name A with loan in name A and then B pays the loan or part of it then this would give B an interest in the property. Same with making improvements. It would be unconsionable for A to retain all the profits from the property for himself if B paid for it.

Being an ex-wife is no impediment if this property is property of the marriage.

 

[rupert11]

Someone can gain an interest in a property by paying for that property. If the title is in name A with loan in name A and then B pays the loan or part of it then this would give B an interest in the property. Same with making improvements. It would be unconsionable for A to retain all the profits from the property for himself if B paid for it.

What Terry_w said.^^
Her name is on the loan.

Cheers,
rupert11

 

[NedKelly]

What Terry_w said.^^
Her name is on the loan.

Cheers,
rupert11

Did she paint the toilet yellow as well?

 

[Aaron_C]

Did she paint the toilet yellow as well?

Maybe it was gold, not canary yellow

 

[NedKelly]

Well let's hope you made a profit Rupert, otherwise she would end up having to pay money to your brother and I doubt she would be so willing to sign your withdrawal form.

 

[rupert11]

Yes we would have gotten a better deal if the house had a gold toilet. ah well. No, luckily she or my brother won't be owing any money on the loan.

Cheers,
rupert11