Caveat disputes

Background law

A caveat against dealings in a particular title to land can only be lodged by a person entitled to do so under Section 137 of the Land Transfer Act 1952.

That is a person who:

“… claims to be entitled to, or be beneficially interested in, the land … by virtue of any unregistered agreement or other instrument or transmission … or … any trust … or is transferring the land … to any other person to be held in trust.”

Once a caveat is lodged in the correct form alleging one of the above interests, the Registrar-General of Land is required to register the caveat. There is no discretion.

The effect of the registration of a caveat is to forbid the registration of any transfer or charge on the land affected, after the registration of the caveat.

The following interests in land will or may support the registration of a caveat:

The creation of a trust affecting the land or an interest in it (registered by the creator of the trust);
A beneficial interest in the land under any trust (registered by the beneficiary of the trust);
The purchaser’s interest in land under an unconditional sale and purchase agreement;
An interest expressly said to be a caveat-able interest in an agreement or contract affecting the land;
An enforceable option to purchase the land;
An unregistered mortgage.

The following rights and transactions will not support a caveat:

An unsecured personal debt;
A licence to access land (a personal right);
A mere right to apply to the Court for relief or remedy;
Claims under the Law Reform (Testamentary Promises) Act 1949 or the Family Protection Act 1955;
Those of a shareholder against a company owning land;
A contractual right of first refusal or pre-emption relating to the land;
A contractual right arising from a management contract affecting the land or a contractual right to a share in the proceeds of the sale of the land;
“Sham transactions”.

There are only three ways a caveat against dealings may be cleared off a land title, by:

Withdrawal by the caveator;

An order of the High Court under Section 243 of the Land Transfer Act 1952; or
Lapse under Section 145.

Order under Section 243

The registered owner of the land can apply for an order that a caveat be removed.

The onus is on the caveator to establish the caveator has a reasonably arguable case for the interest claimed.

The Court has the discretion under Section 243 to make any order it thinks fit (removing or sustaining the caveat).

Lapse under Section 145

Under Section 145, a caveat lapses if notice is given to the caveator an instrument has been presented for registration by the Registrar-General of Land, and the caveator does not respond:

Within 14 days, with notice to the Registrar an application has been made to the High Court preventing lapse; and

Within a further 28 days, with service on the Registrar of a High Court order sustaining (or extending) the caveat.

Section 145 therefore provides a procedure through which a person wishing to register an instrument affecting the caveated land can throw the onus of taking action to sustain or extend the caveat (or to prevent its lapse) on to the caveator.

These time frames are unable to be extended. Once a caveat has lapsed, the caveator is unable to re-lodge the caveat.

Frequently encountered issues

Whether the caveator is entitled to register a caveat on the grounds of Section 137 and therefore whether it should be removed or sustained;

The best means by which an application for removal should be pursued.

What you should provide when instructing us

A narrative about what has happened in terms of the dispute to date; your situation; and your point of view;

The address of the affected property and/or its title number;

Copies of all correspondence and documents you have which have bearing on the issue;

Copies of any Court documents filed or you have been served with to date, and any notices from Land Information New Zealand you have received to date.

About Us

Peter McCutcheon is a Barrister and Solicitor, specialising in commercial and relationship property litigation. Peter has an economics degree, a post graduate banking diploma (with distinction), and a law degree from the University of Auckland (with honours). Peter's more general litigation practice areas are commercial litigation, relationship property litigation, shareholders' disputes, insolvency and company liquidations, caveat disputes, estate disputes and criminal law. Peter is committed to providing excellent legal services to companies and people who understand value.