Q. We are offering a deceased estate property for sale that has a caveat on it.  The caveat mentions the Queen through the Director General of Health as mortgagee and the registered owner as mortgagor.  It says the caveator forbids the registration of any instrument, or the recording of any matter in the register that transfers, charges or prejudicially affects the estate ... until the caveat is removed by the caveator, or High Court.  What is a caveat, and can it be removed before we put the property on the market?

A. What is a caveat? In general terms, a caveat (Latin for “let him beware”) is essentially a notice lodged by a party with a qualifying “caveatable interest” in the land which can, among other things, prevent most dealings with the land.

It will prevent, for example, the land being sold, otherwise transferred, or mortgaged. It is intended as a “stop” notice to the world. As with so many elements of the law, there are some exceptions to the inability to deal with the land and these are best addressed in light of your circumstances.

How can you remove a caveat? If you are looking to actively remove a caveat, then the following methods may be available: withdrawal by the individual/entity who lodged the caveat (the caveator); removal by application to court; and the caveat lapsing. The easiest way to have a caveat removed is to engage with the caveator and see if they will agree to withdraw the caveat. This can be done relatively simply by the caveator or by their agent under written authority.

Any person who has an estate or interest affected by a caveat against dealings may make a court application to remove a caveat under s142 of the Land Transfer Act 2017. This application can be made by “originating application” (a more streamlined process that may allow the application to be decided on the basis of affidavits and without the need for witnesses to appear in court). The registered owner of an interest protected by a caveat against dealings, or a person wishing to register an instrument affecting that estate or interest, may apply to the Registrar-General of Land for the caveat to lapse.

The Registrar-General must then notify the caveator, and the caveat will lapse unless the caveator gives notice within 10 working days that an application has been made to the High Court that the caveat does not lapse. Within a further 20 working days, the caveator must notify the Registrar-General they have obtained a High Court order that the caveat not lapse or obtained an interim order or order for an adjournment.

In respect of the “removal” and “lapse” options, if a caveator does attempt to sustain its caveat before the court, they will generally need to show there is a reasonably arguable case for the interest they claim allows the caveat to be made. If they do manage to show this, then courts are often reluctant to remove the caveat or have it lapse. If the timeframe indicated in the “lapse” process suits your needs, this can be a useful way of causing a caveat to fall away from the land without needing to spend too much on legal and court fees.

Please note that all circumstances are unique and require specific advice tailored to your individual situation.

- Shane Campbell

wynnwilliams.co.nz