A purchaser who has signed a Sale and Purchase Agreement may still have to wait before the transfer can be registered.
During that period, the registered title may remain in the vendor’s name.
One possible protective measure in an appropriate transaction is a private caveat.
A private caveat is not required in every property purchase, and it should not be treated as a universal substitute for proper conveyancing work.
Its suitability depends on the purchaser’s caveatable interest, the title status and the structure of the transaction.
Table of Contents
What Is a Private Caveat?
A private caveat is an entry made against land under the National Land Code by a person who claims an interest of a kind capable of supporting the caveat.
Its effect is generally to prohibit the registration, endorsement or entry of specified subsequent dealings or claims while the caveat remains in force, subject to the National Land Code and the priority of matters presented earlier.
A caveat therefore operates as a form of temporary protection on the register.
It does not transfer ownership to the caveator.
Who May Lodge a Private Caveat?
The National Land Code identifies categories of persons who may apply for a private caveat.
A person must have a proper caveatable interest.
Depending on the facts, this can include a purchaser who has acquired an equitable interest under a binding Sale and Purchase Agreement.
However, simply asserting an interest does not make every caveat proper.
A caveat lodged without sufficient basis can expose the caveator to legal consequences.
Why Might a Purchaser Lodge a Private Caveat?
1. To Protect the Purchaser’s Interest Before Transfer
Between signing and registration of the transfer, the purchaser may have a contractual or equitable interest while the vendor remains the registered proprietor.
A properly lodged caveat may help protect that interest against later registrable dealings that are inconsistent with the purchaser’s claim.
2. To Give Notice on the Register
A land search may reveal the caveat to persons dealing with the title.
That makes the purchaser’s asserted interest visible on the land register.
3. To Reduce the Risk of Inconsistent Subsequent Dealings
A private caveat can restrict later dealings that fall within its statutory effect while it remains in force.
However, it should not be described as making fraud impossible.
Nor does it necessarily defeat an instrument or dealing that had already been presented before the caveat.
Priority and the precise statutory effect matter.
Is a Private Caveat Compulsory for Every Purchaser?
No.
A purchaser’s private caveat is not automatically required in every transaction.
Whether it is advisable depends on factors such as:
- whether an individual or strata title has been issued;
- whether the vendor is the registered proprietor;
- whether the transaction is a sub-sale or developer transaction;
- the expected period before transfer;
- existing charges or caveats;
- the financing structure; and
- the overall conveyancing strategy.
Your conveyancing lawyer should assess whether lodging one is appropriate.
When May It Be Particularly Relevant?
A purchaser’s caveat may be considered where, for example:
- a sub-sale involves an issued individual or strata title;
- there will be a meaningful interval before registration of the transfer;
- the purchaser has paid substantial sums before registration;
- the title remains in the vendor’s name; or
- the transaction otherwise creates a practical need to protect the purchaser’s equitable interest.
These are considerations, not automatic rules.
Can a Wrongfully Lodged Caveat Cause Problems?
Yes.
A caveat should not be lodged merely to pressure another party or because there is a disagreement unrelated to a caveatable interest.
A person who lodges or maintains a caveat without proper basis may face an application for removal and potential liability under the applicable law.
What Should a Purchaser’s Lawyer Check Before Lodging?
Depending on the transaction, the solicitor may consider:
- current title search;
- registered proprietor;
- existing charges;
- existing caveats;
- restrictions in interest;
- SPA terms;
- nature of the purchaser’s interest;
- financing arrangements;
- timing of completion; and
- whether another protective structure already exists.
What Happens Once the Property Is Transferred to the Purchaser?
Once the purchaser becomes the registered proprietor, a purchaser’s caveat lodged to protect the pre-registration interest may no longer serve the same purpose.
The conveyancing solicitor can then attend to withdrawal or other appropriate steps where required.
Can You See an Existing Caveat Before Buying?
Yes.
A current land search can reveal registered matters affecting the title, which may include:
- private caveats;
- Registrar’s caveats;
- charges;
- restrictions; and
- other registered interests or endorsements.
This is one reason land searches are an important part of conveyancing due diligence.
Frequently Asked Questions
Does a private caveat make me the owner?
No. It does not transfer registered ownership.
Does a caveat guarantee that nobody can deal with the property?
No. Its effect is governed by the National Land Code and subject to matters such as the type of dealing and priority of presentation.
Is a caveat compulsory after signing an SPA?
No. Whether it is appropriate depends on the transaction.
Can a vendor remove my purchaser’s caveat?
The National Land Code provides mechanisms by which removal can be sought. If removal is challenged, deadlines and court procedures may become important.
Should I lodge a caveat before paying the balance purchase price?
That depends on the SPA, title status, existing encumbrances and completion structure. Ask the solicitor handling the conveyancing.
Will a land search show a caveat?
A current official land search should reveal caveats and other registered matters affecting the title.
Buying a Property in Malaysia?
A private caveat is one potential protection within a wider conveyancing process.
It should be considered together with title searches, redemption, financing, consent requirements, completion documents and registration of the transfer.
View our Conveyancing Services
This article is provided for general informational purposes only and does not constitute legal advice. The appropriateness and effect of a caveat depend on the National Land Code, the title and the facts of the transaction.