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Judgment Debts and Caveats

Judgment Debts and Caveats

Published on January 12, 2015 by Adrian O’Dea

You can only place a caveat over real property if you have a caveatable interest in that property.  A Court judgment against a person does not necessarily create a caveatable interest in real property giving rise to an entitlement to lodge a caveat over it.  If you improperly lodge a caveat, the potential costs consequences and damages that may be awarded against you can be significant.

A person who lodges a caveat without reasonable cause may be liable in damages to the registered proprietor of the real property.  For example, if you have lodged a caveat over real property in circumstances where you do not have a sufficient caveatable interest in the land to support the caveat, and this prevents the registered proprietor of the land from settling on the sale of the land, you may be liable to pay compensation to the registered proprietor of the land.

Caveats are registered on the title of a property so that parties are put on notice of the caveator’s interest in that property.  When a caveat is lodged, it prevents the Registrar General from registering any dealing (except for some statutory exceptions and any specifically permitted dealings) in relation to the property that is inconsistent with the interest of the party who has lodged the caveat.

You may be able to negotiate with a judgment debtor and agree to create a caveatable interest in real property by way of a charge over the property for the amount of the debt outstanding to you.  You can then lodge a caveat to protect your interest created by the charge.  You will usually need the consent of the registered proprietor to charge their property with the amount of the judgment debt.  Stamp duty is usually payable on the charge, together with registration fees to lodge the caveat.  In some cases, agreement might be reached to create a registered mortgage over the title of the debtor’s property.

The information contained in this article is not to be taken as legal advice. Please contact us if you require specific information or advice.   

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