LawProperty and real estate

Supreme Court issues timely reminder on registration of caveats: A homeowner’s nightmare

By 8 May, 2023 May 10th, 2023 No Comments

By Jasmine Lim

Supreme Court issues timely reminder on registration of caveats: A homeowner’s nightmare

On 24 February 2023, the Supreme Court of Queensland handed down a significant decision in Issa v Owens, which led a couple to move out of the home they purchased and lived in for 5 years, but never legally owned. The basis for the Court’s decision was the finding that a registered caveat against the title prevented the transfer of legal ownership to the purchasing couple.

Issa v Owens [2023] QSC 4

In this case, Mr and Mrs Morecroft (the Morecrofts) were purchasers of the property located in Mermaid Beach, Queensland (Property). The Property was sold at an auction by mortgagees who possessed and sold the Property as a result of the mortgagor’s default. The registered proprietor, Ms Issa, was never the true mortgagor. Ms Issa lodged a caveat to prevent the sale from happening as she claimed the mortgage on the Property was fraudulently procured by a relative. Through negotiations between the mortgagees and Ms Issa, the caveat was subsequently withdrawn in exchange for Ms Issa accepting an offer of $40,000 from the mortgagees.

After the settlement of the Property, the Queensland Registrar of Titles (Registrar) lodged a second caveat in respect of Ms Issa’s previous complaint of fraud to the land titles office. Accordingly, the transfer of legal ownership to the Morecrofts had not been registered as the transfer was prevented by the Registrar’s caveat.

Grounds for Decision

Caveat as a shield

  1. The Court invoked section 17(2)(e)(ii) of the Land Title Act 1994 (Qld) (LTA), in which the Registrar was justified in lodging a caveat to prevent the dealing of the Property which may prejudice Ms Issa’s interest in land due to fraud or forgery.

Record on the register

  1. The Registrar’s caveat, recorded on the land titles register, operated as a ‘notice to all the world’ of Ms Issa’s interest in the land.

Transfer must be registered before legal ownership can be transferred

  1. As such, pursuant to section 183 of the LTA, interest in land is not transferred to the Morecrofts until the transfer is registered by the Registrar.

Application in Western Australia

In WA, there are different types of caveats that may be lodged against a title. In drawing a practical scenario from the Issa case, a caveat to prevent improper dealings may be lodged by a registered proprietor if the title may be the subject of identity fraud or the forgery of documents. At present, a Licensed Settlement Agent does not have authority under the Settlement Agents Regulations 1982 (WA) to sign and lodge a caveat to prevent improper dealings.

Similar to Queensland, the Registrar of Titles in WA is empowered to lodge a caveat to protect the registered proprietor’s interest from fraud or improper dealing, and thereby prevent any transfer of land from happening.

The importance of Property Caveats

  • To ensure a party’s interest in land is protected when that land is being dealt with.
  • To protect direct interests in property (such as to protect a tenant’s leasehold interest or a buyer’s interest under an executed contract of sale).
  • Caveats can also form security for the performance of obligations under agreements, such as the repayment of monies under a loan agreement.

How can a Caveat help me?

It is important to note that lodging a caveat is a legal step that should be taken after seeking advice from a legal practitioner, as there are serious consequences for lodging a caveat without a caveatable interest. Here are some ways a caveat can help you:

  • If you are the registered proprietor of your property and your legal interest may be jeopardised by someone else’s actions, whether fraudulently caused or otherwise.
  • If you enter into a contract with a party and that party pledges any property owned as security for the debt owed to you.
  • If you need time to resolve a legal dispute with a property owner, a caveat prevents the settlement of the sale of the property.
  • If you are the purchaser of a property and want to notify the world that you have an interest in that land to prevent unscrupulous vendors from selling the property to someone else.
  • If you are a leasehold tenant and want to protect your interests pursuant to the lease.

Key takeaways from the case

  • A standard settlement process focuses on the conveyance of property from a vendor to purchaser, where it is common that unforeseeable risks are ‘left at the door’.
  • If Ms Issa had not taken reasonable steps to protect her legal interests in her property, she would have lost her enforceable right to ownership post-settlement.

Looking to safeguard your interests in property? Pragma’s property lawyers can assist individuals and businesses with tailored legal solutions to mitigate risks associated with property ownership, leasing and interest protection. Call us on (08) 6188 3340 and request a call back or contact Special Counsel Lauren Evans or Lawyer Jasmine Lim