What is caveat?
A caveat means to stop a property from being transfer of ownership because the person who register the caveat on the property has an interest.
How to caveat?
Go to land office, fill up a form and to provide supporting document to proof you have an interest in the property then a caveat will be registered in the title.
Why caveat?
It is to protect the person who has an interest in the property.
For example, when you purchase a property with individual or strata title, your lawyer will proceed to register a caveat after you signed Sales & Purchase Agreement (SPA) to protect your interest. It is because you would have paid 10% deposit upon signing the SPA. If your lawyer does not register a caveat then vendor will be able to sell and/or transfer of ownership to others instead of you therefore you might lose your deposit paid.
Another example is Bank will register a private caveat as a chargor for a property which they are financing.
How to identify a title with caveat?
All interested bidder is highly recommended to conduct title search at relevant land office. If there is a caveat, it will be shown in the title search result such as in image shown below.
If the property is still under master title then usually you will not need to conduct title search because the property does not have its own title yet therefore it can’t be caveat.
How to manage this risk?
You can still purchase a property with caveat but you will need to identify what type of caveat and reason of caveat on the property. There are 2 common types of caveat:
Private Caveat which is register by Individual or Finance company
Registrar Caveat which is register by Statuary Body / Government Agencies
If it is a private caveat then you can appoint a lawyer to apply with high court for an order to remove the caveat after you have successfully bid and usually you do not need to pay the caveator any fees.
If it is a registrar caveat then you will need to identify who register the caveat such as LHDN, government, land office, or etc by doing a caveat search at relevant land office and then check with caveator reason they caveat it such as debt claim, fraud, or etc.
Please refer image below sample of caveat search at land office.
If the reason of caveat is because of debt claim then check with the caveator of the total outstanding amount. Unlike private caveat, you will need to pay this outstanding debt claim because it is not possible for you to remove registrar caveat by applying a court order with a lawyer at high court.
After that, calculate if it is still worth to bid on coming auction after adding this outstanding fees or otherwise to wait for reserve price to drop further.
If the registrar caveat is because of other reason such as fraud, error in the title or etc then it is not advisable to bid this property.
However, it is preferably a cash buyer to bid a property with a caveat because your bank will only disburse loan after caveat is removed. Successful bidder will need to pay balance purchase price within 90 or 120 days but the process to remove caveat may take longer than that. Therefore, you will need to stand by cash to pay balance purchase price in case caveat is not remove on time.
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on said
A round of applause for your article. Thanks Again. Great. Karna Enrico Perri
Mak Kar Kuen
on said
Thank you very much
Mark
on said
Does it make any difference whether it is a LACA (bank auction) or non-LACA (High Court auction) when a property has a caveat? Will a high court auction property with caveat makes the caveat easier to be removed as the seller is essentially the high Court themselves?
Mak Kar Kuen
on said
Usually there is no caveat when it is LACA because the property to be auction does not have its own title or strata title yet. Non-LACA is including auction at high court and land office too. It does not make it easier or not to be remove if auction at high court or land office. Most importantly, private caveat definitely can be remove at both venue.