The sellers who were notoriously slammed for pocketing a couple’s $75,000 deposit say they have been left “devastated” after incurring unexpected Court cost from the debacle. The Queensland sellers, who were branded “greedy”, were set to walk away with an extra $140,000 on their Brisbane property sale. Instead, they ended up with almost nothing extra. Attwood Marshall Lawyers Commercial Litigation Associate, Georgia Taylor, discusses important aspects of Queensland property law and the unexpected costs that can be incurred.
Background
Attwood Marshall Lawyers recently reviewed the widely publicised banking mishap which “cost” first-home buyers their $75,000.00 deposit. Now the labelled ‘greedy’ sellers, have identified the true costs and legal implications that can arise out of withholding buyer deposits and entering a new sale contract without first resolving an impending dispute.
On October 29, 2021, 9 days after Mr Trau and Ms Goyder lost their dream home, they lodged a caveat on the Brisbane property they were supposed to purchase, which stood to prevent the owners from on selling the property for a higher price. With the new incoming purchaser who paid an additional $65,000.00 to secure the property no doubt eager to settle on their purchase, the sellers were forced to commence urgent Court proceedings in the Supreme Court of Queensland, seeking Orders that the caveat lodged by the former purchasers, be removed.
The sellers have now declared that they lost “tens of thousands” of dollars on additional legal costs to remove the caveat which stood to block the second sale.
As one of the most common legal transactions with any number of interested parties, special conditions and time limits, there is no surprise that property transactions can become complex and litigious if parties can’t abide by the terms of the contract.
Caveats, a common tool used in litigation and can be used to prevent the sale of a property if a transaction is in dispute. We explain below the implications and costs of having a caveat removed, as was required in the case of the “greedy seller”.
What is a caveat?
A caveat is a registration on the title of the property, deriving from the term ‘caveat emptor’ meaning “buyer beware”. A caveat is a document which a person either with or without legal title in the property can lodge, if they assert that they have a caveatable interest in the property. The purpose of the caveat is to warn potential buyers, financiers or other parties making enquiries into the property, that there are other parties with a potential competing interest. If you own a property in Queensland, and someone has lodged a caveat over the land, you will generally be prevented from transferring or dealing with the land until the caveat is withdrawn, removed, lapses, or is cancelled. As the owner of the land, you are known as the caveatee and the person or entity who has registered the caveat on your property is known as the caveator.
In Queensland, a caveat is either lapsing or non-lapsing. Caveats that are non-lapsing, are those lodged under s126 (1) of the Land Title Act 1994 (the Act) and are:
- Lodged by the registered owner;
- With the consent of the registered owner;
- Lodged with a copy of a Court order mentioned in s122(1)(d) or (e) of the Act, which is to be deposited with the caveat when lodged;
- By the Registrar under s17 of the Act; or
- It is lodged not pursuant to Part 7, Division 2 of the Act
Caveats that do not fall under the above categories are generally considered ‘lapsing’ caveats.
If a caveat has been registered over the title of your property and you want to remove it, you must seek legal advice immediately. Depending on your circumstances, here are some options that may be available to you.
1. Issuing a notice under s126 of the Act: For a ‘lapsing’ caveat not to lapse, a caveator must commence Court proceedings against the registered proprietor to establish the interest claimed under the caveat. These proceedings must be commenced and lodged under the appropriate form with the Land Tiles Office prior to the three-month lapsing period. Failing these proceedings being commenced, the caveat will lapse.
If a registered owner doesn’t want to wait the three months to see if the caveator will commence proceedings, then they can issue a notice under s126(2)(a) of the Act, which forces the caveator to commence the Court proceedings and lodge the required form with the Land Titles Office within 14 days from the date the notice is received.
Failing the caveator commencing proceedings and complying with the lodgement provisions within either the three month or 14 day time period, the caveat will lapse. The registered proprietor can then request the Land Titles Office to remove the caveat from title (this does not happen automatically).
2. Registered proprietor seeking urgent Court order pursuant to s127 of the Act: As a registered proprietor, notice of a caveat being lodged on the title of your property can often be missed (and ignored). It is normal for a registered proprietor or families of a registered proprietor to only become aware of a caveat when trying to deal with the property. These circumstances can entail entering a contract for sale, refinancing a mortgage or the death of the owner. Often the case, there is limited time to wait to issue a s126 notice (as identified above) and like the owners of the Brisbane property, you must take other drastic measures.
The Act makes provision for the urgent removal of a caveat or allowance to deal with a property, under s127 of the Act. S127 of the Act permits a caveatee at any time, to apply to the Supreme Court of Queensland and seek orders that the caveat be removed. The Court also has powers to make alternative orders, on the terms it considers appropriate. Whilst an excellent mechanism, this can be a complex process and is only available in limited circumstances.
3. Registrars’ cancellation: Finally, under section 128 of the Act, the Registrar may cancel a caveat if the request to cancel is lodged by a registered proprietor and the Registrar is satisfied that:
- the interest under the caveat claimed has ceased, been abandoned, or withdrawn; or
- the caveat claim has been settled by agreement or otherwise satisfied; or
- the nature of the interest claimed does not entitle the caveator to prevent another lodged registration; or
- the caveator has a caveat subject to an order under s122 (1)(e) and that proceedings has been discontinued, dismissed or otherwise has ended.
4. Caveator withdrawing the caveat from title: The most obvious and preferable course of action for a caveat to be removed is to have it withdrawn by the caveator. Whilst this is not always practical for a variety of reasons, if both parties are legally represented and are commercially minded, steps can be taken to protect both parties’ interests and reduce costs.
Once removed, lapsed, or withdrawn from title, a caveat of the same or substantially similar interest cannot be re-lodged. If a caveat is lodged improperly and without grounds, it can have serious costly consequences for the caveator.
A caveat is not a tool to be used without cause and should only be lodged after obtaining sound legal advice from an experienced practitioner.
Attwood Marshall Lawyers – helping to resolve property disputes quickly and cost-effectively
If a home seller desires to end an agreement, and finds themselves in potential breach of contract, we have dedicated commercial litigation lawyers who understand the complexities of property and commercial law and the wide range of issues that can arise during the process of buying and selling real estate.
Our team can investigate your matter and provide you with helpful, practical advice on the options available to you if you have been impacted by a Contract of Sale falling through. No matter the type of dispute you are faced with, we can provide support and help guide you through this challenging time in your life.
Our team specialise in complex and urgent litigation and have experience in all matters concerning caveats and interest in property.
If you are involved in a property dispute, please contact our Commercial Litigation Department Manager, Amanda Heather, on direct line 07 5506 8245, email aheather@attwoodmarshall.com.au or free call 1800 621 071 to find out where you stand.
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