When a relationship breaks down the
parties often lose trust and faith in each other. If the property
the parties lived in is owned in one of the parties names solely
(Party A), the other party (Party B) needs to be aware that Party A
may try and do something with the property, such as to sell it or
refinance it without the other party's consent. In this situation
Party B should consider whether to lodge a caveat over Party A's
We're going to run a series of blog postings on this topic and
this series will explore the pros and cons of taking that
A caveat is a way that an interested party can record their
interest in a property on the certificate of title. The certificate
of title is the document that records important information about
the property such as ownership and any mortgages etc.
The most common circumstance for lodging a caveat on a property
is where the parties have been in a de facto relationship or
married yet the property is owned in only one party's name. This
means that when they separate Party A can deal with the property in
any way they like such as:
- Selling the property (for example to a friend or acquaintance
at less than it is worth.)
- Borrowing against the property, referred to as "encumbering"
the property (such as borrowing money secured against the property
and thereby reducing the equity in it)
In each of the above examples Party A will get access to money
from the property which they could then hide or spend.
If a caveat is registered on the property, Party A will not be
able to follow through with any sale as the transfer of the
property can not be processed while the caveat is on the title.
When lending money, a lender will want to protect the loan to
reduce the risk that they won't be paid back. This process is known
as "security" and a mortgage over a property is the preferred form
of security for lenders. If you want to borrow money against your
property, the lender will check the certificate of title of the
property when determining whether to lend money.
In this case, without a caveat, Party B would not be mentioned
at all on the certificate of title for the property as it is
registered solely in the name of Party A and the lender would have
no idea that Party B has an interest in the property. If there is a
caveat, the lender would be alerted to the interest of Party B
straight away and would not be able to register their mortgage on
the property. This preserves the equity in the property and means
that the lender would be far less likely to lend the money to Party
If you'd like more information on caveats or you wish to obtain
advice on getting a caveat put on a property to protect your
interests, you should contact our Partner in Family
Law, Ryan Thomas.
Please note, this Blog is posted in Adelaide, South Australia.
It relates to Australian Federal legislation in relation to Family
Law matters and South Australian legislation in relation to