Registering a Caveat for IP

Hi Experienced Investors,

I am in the process of settling my first IP in Melbourne. My loan is almost done and I have just received a bunch of documents from my legal adviser/conveyancer.

My question is around Cavetas and measuring the land size.

One of the documents states - please notify us within 5 days if you don't want to register a Caveat. If you don't receive any notification from you we will register a Caveat on your behalf and the cost is $XX.

Do I need to register a Caveat for the IP? Is it necessary? The overall cost is approx $250 (in addition to the other fees and charges)

2nd question is they have asked me to get a surveyor to measure the land size. Is it good idea to do this?

Any advice from your side is appreciated.

Thanks.

 

Isn't this something your conveyancing solicitor should be advising you about?

 

Look up the case of black v garnock

 

Lodging a caveat is an insurance against vendor change of mind/circumstances and should be done in most cases.

 

I know it is common down there, but it is not the norm in NSW or QLD but it could be done for the same reasons.

Does the VIC system not provide a gurantee against fraud ?

You could also lodge yourself once you have a genuine interest.

 

In NSW it is the norm for lawyers to recommend ever since the black case which was a nsw sc case I think

 

Good point. I will check with them.

Just wanted to check with the members here to see if it's worth getting it done.

 

I am not sure about that. I will google that.

 

Wow!

'This decision has significant practical consequences and as a result, our practice is to strongly recommend to our purchaser clients that they should lodge a caveat on title as soon as possible after exchange of contracts and to conduct a title search as close to the time of settlement as possible. Whilst the chances of the same circumstances arising as in Black and Garnock are not likely, the case highlights the importance of properly protecting the interests of a purchaser as soon as possible after an exchange of contracts has taken place.'

 

Found this interesting article -

Should I lodge a Caveat? - lewislegal business and property lawyer

 

Yeah, but you have to work out/consider....

There is always risk that something can go wrong, caveat or not, this situation would still mean a legal battle, it may be better to walk away from the deposit amount.

Also I see no reason with todays prices to be paying 10%, even at auction I ask for much lower amounts and even as much as 1k should suffice.

It is when your buying big prices, big deposits, but I am not sure a caveat does more than ensure your now going to be named in an action.

 

PS your solicitor should always be checking title right before settlement, and I would assume the lenders would be too, but maybe not.

PS PS lot of people do many things they should not be doing thee days and taking many risks they do not understand.

 

So vendor changes mind, does not want to sell now, your caveat does what exactly ?

 

Never had one recommend or even discuss in over 2 decades over various solicitors, many individuals.

I would not bother, but would not allow release of funds.

 

As another bit of info, I am not 100% sure, but now with electronics, I would be surprised if this was not revealed as trying to settle therefore preventing the hand over of funds.

Would lenders also be checking title at settlement time these days ? At the same time I mean, not 9am when settlement is 2pm.

Anyone in this process are also going to be implicated in any case where money was handed over and title was not secured.

 

Great question - it then becomes the responsibility of vendor to negotiate removal of caveat or take you to court to get the caveat removed and they are bound to lose both ways.

They simply can't do anything with the property with a valid buyer caveat which could also invalidate their mortgage contract with their bank because banks don't deal with properties with 3rd party caveats on them. In short, vendors are much much better off completing the transaction if buyer has a caveat lodged.

 

Imagine a scenario where vendor owes company x $100 who lodge a caveat at the last minute but settlement goes through and vendor gets paid (assume property was worth $50). They then settle their loan with company x and file for bankruptcy. Company x wins the claim for remaining $50 and win it because their interest comes ahead of you due to caveat before settlemet. You now have a mortgage for 30 years but no title transferred.

Banks don't do last minute due diligence because you own the risk, they don't.

 

What I asked was specifically in regard now to electronics & the way it is done now.

It should be far less of a risk & the banks also will take an interest, I would not have a mortgage for 30 years and no property if it was the only place I owned.

A place will not settle in your scenario, that is the purpose of the caveat.

 

The issue is someone else could register a writ on title after exchange but before settlement and that could give them priority higher than the interest of the purchaser.

Electronic settlement would not change this but it may be less likely that you would settle not knowing this.

 

That is what I was thinking, would be less likely, you could ask for a search to be done just minutes prior, say via phone, still things can go wrong, but you could get flattened by a bus being distracted by all the risks too

The caveat cannot hurt, I guess you have to feel out your vendor, my last one was a bank, probably more risk dealing with them in every other aspect than someone claiming they owe them money and catching you out at settlement.

Dealing with the caveat at settlement time may be just as inconvenient as a last minute phone call to a colleague sitting at a PC doing a search or other, or does the LPI allow it to go through if the caveat notes the person/s/entity the same as where it is being transferred too ?

I guess one day, when doing enough transactions or if very unlucky, you may win the lottery