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 seller will be able 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 and registrar caveat.
Private Caveat is register by Individual or Finance company
Registrar Caveat 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 this caveat after you have fully paid balance purchase price. According to National Land Code section 327 “Any person or body aggrieved by the existence of the “private caveat” may apply to the High Court for an order to remove the caveat. The courts has taken the view that whether a person is aggrieved by the existence of a caveat will depend on whether he will suffer loss if the caveat is not removed. In this case, successful bidder is suffering loss if private caveat is not remove therefore usually a private caveat can be remove. In addition, you do not need to pay the caveator. It will be best to seek legal advise from a lawyer who has experience in this before auction.
However, you must be a cash buyer to bid for a property with private caveat because bank will not finance it but you can refinance it later after private caveat has been remove which takes around 3 – 6 months.