(Frequently Asked Questions – Private Caveats)

Question: What are private Caveats?

 

Answer: Private caveats are protective devices lodged/entered by purchasers when they have paid 10% ( or even 2% ) of the purchase price as deposit for the sale and purchase agreement.

Question: Is there any difference where the property has a separate title as compared to where the property has no separate title but is part of a big piece of land held under a Master Title?

Answer: Yes. If the property has a separate title, a private caveat can be lodged over that title. This will prevent the seller from further selling the property.

Question: How does it prevent the seller from further selling the property?

Answer: Put simply, the private caveat serves as a “notice to the whole world” that the seller has agreed to sell this property to the purchaser, and any one else buying it after this sale and purchase agreement will not have the right to the property as the first purchaser.

The first purchaser’s interest is thus protected. The purchaser has “put the whole world on notice” of his/her interest/claim to the property.

Question: Coming back to where the property forms a small part of a big piece of land held under a Master Title, can a private caveat be lodged on the land held the Master Title?

Answer: Yes. The private caveat should describe it as a caveat to protect the purchaser’s interest in that “smaller” part of the land where the property is situated.

Question: What happens if the purchaser does not lodge a private caveat?

Answer: An innocent party dealing with the owner, may enter into an agreement with the owner to lease the property, or even to buy the property. The lessee if he lodges/registers his/her lease, will have a right to the full term of his lease of, say 5 years, and thus the purchase cannot get vacant possession for 5years lease period.

The innocent second purchaser will have a right to purchase and complete the sale and purchase agreement with the same defaulting seller.

The remedy open to the purchase is only monetary compensation from the defaulting seller/ owner:-

  • In the case of the lease of 5 years, the purchase loses the right to vacant possession if the lessee wishes to stay on the property until the end of the 5 years lease. The purchaser will however get the rental from the lessee.
  • In the case of a second sale and purchase agreement, the first purchaser loses the right to complete the sale and have vacant possession of the property.

The purchaser loses his/her caveatable interest in the property. As the subsequent parties had no notice of the purchaser’s interest, the purchaser has to take the property subject to the subsequent parties prior interest.

Question: How are private caveats entered?

Answer: The purchaser has to sign a land officer statutory form, and affirm a statutory declaration to support his/her in the land. The purchaser pays a fee to the land office for entering the private caveat. Usually the lawyer will handle it for the purchaser. The lawyer may also affirm the statutory declaration instead of the purchaser.

Question: How are private caveats withdrawn?

Answer: They are withdrawn by filing a land office form of withdrawal of private caveat. This time there is no need to affirm a statutory declaration in support of the withdrawal.

CONCLUSION: In conclusion, it is prudent for the purchaser to enter a private caveat once he/she has a sale and purchase agreement and has paid a deposit sum. This ensures he/she will have the opportunity to complete the sale and purchase agreement.

His/her private caveat will prevent other subsequent dealings on the property. For instance, a subsequent lease cannot be registered without the caveator’s knowledge or consent.

An intending second purchaser would have got his/ her lawyer to do a land search before the payment of the deposit to the same seller, and notice of the first purchaser’s caveat, will deter the second purchaser from signing the second sale and purchase agreement with the same seller.