Caveat
A legal notice registered on a property's certificate of title warning that someone claims an interest in the property.
What is a Caveat?
A caveat is a formal warning lodged with LINZ that alerts anyone searching the title that a third party claims some right or interest in the property. The word comes from Latin, meaning 'let them beware'. Once a caveat is registered, the property generally cannot be sold or transferred until the caveat is removed or the caveator consents.
Common reasons for lodging a caveat include unpaid debts secured against the property, disputes over ownership, claims under a relationship property agreement, or a purchaser protecting their interest between signing and settlement.
Caveats are governed by the Land Transfer Act 2017. They can be removed by the caveator voluntarily, by a court order, or by the Registrar-General of Land if the caveator doesn't take action within the required timeframe after being served with a lapsing notice.
Why It Matters for Due Diligence
A caveat on a property you're looking to buy is a serious concern. It indicates that someone other than the registered owner claims a legal interest. The sale may not be able to proceed until the caveat is resolved.
Your lawyer should investigate any caveats shown on the title search. Ask the seller's lawyer to explain the basis for the caveat and confirm it will be removed before settlement. Never proceed to settlement with an unexplained caveat on the title.
How to Check
Caveats appear on the certificate of title, which your lawyer will obtain as part of the title search through LINZ. The caveat record shows who lodged it and the nature of their claimed interest. Your lawyer will review this and raise it with the seller's lawyer if necessary.
Frequently Asked Questions
Can I still buy a property that has a caveat on it?
Generally the caveat must be removed before settlement can proceed. The seller's lawyer should arrange removal. If the caveat reflects a genuine dispute, you may want to reconsider the purchase or wait until it's resolved.
How long does a caveat last?
A caveat remains on the title until it is withdrawn, lapses (after a lapsing notice is served and the caveator doesn't respond within the required period), or is removed by court order.
Related Terms
Registered Interest
GlossaryAny right or claim recorded on the property's certificate of title, such as a mortgage, easement, covenant, or caveat.
Sale and Purchase Agreement
GlossaryThe legally binding contract between buyer and seller that sets out all the terms and conditions for a property transaction in New Zealand.
Settlement
GlossaryThe day ownership of a property officially transfers from the seller to the buyer and the purchase price is paid in full.
Lien
GlossaryA legal claim registered against a property as security for an unpaid debt, preventing the property from being sold or transferred until the debt is settled.
Mortgage
GlossaryA loan from a bank or lender secured against the property, giving the lender the right to sell the property if the borrower defaults on repayments.
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