Contract.docx

ADAMAS UNIVERSITY

ROLE OF CAVEAT IN PROPERTY AGREEMENTS CONTRACT ASSIGNMENT ROLE OF CAVEAT IN PROPERTY AGREEMENTS WITH BRIEF ANALYSIS AND PROCEDURES TAKEN STEP BY STEP.

NAME-DIPESH BHATTACHARYYA ROLL-03 , BBALLB(H) SUBJECT-CONTRACT

4/27/2018

iNTRODUCTION; A caveat is a document which is lodged against a title to land and is notice by an interested party that no action is to be taken in relation to that title until that party’s interest has been taken into account. The main purpose of a caveat is to prevent the sale or disposition of the land until the issue of the interest under the caveat has been protected or perfected. The most common form of caveat is the caveat against dealings with a particular piece of land.A caveat is commonly used in the breakdown of relationships so that one party can preserve their interest in a property which may be in the name of the other party, but where both parties had made contributions to the property and the relationship. A caveat must include (among other things): 

The name and address of the caveator (the person who lodges the caveat);

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The name and address of the caveatee (the registered owner) and any other party having an interest in the property (for example, any mortgagee);

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The interest claimed by the caveator; and

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The grounds on which the interest is claimed. The caveat must be signed by the caveator or on or behalf of the caveator by the caveator’s solicitor. Because of the significance and impact a caveat may have, we require all caveats to be signed by the client (the caveator). 2. WHO IS A Caveator a) The name of the person who is claiming an interest in the land is required. A "person" includes a corporation (6) but not a partnership or trade name as neither is a person at law as required by section 130. Corporate caveators must comply with section 27. b) Where a person is claiming an interest "as agent for" or "on behalf of" or "as receiver and manager of" a disclosed principal, the

principal is the caveator. In the case of a receiver and manager this information should be entered in document particulars. c) Where a person is claiming an interest as “trustee in bankruptcy” of a disclosed principal and the bankruptcy endorsement is not registered on the title, then the principal is the caveator. The bankruptcy trustee must be entered in document particulars. d) A caveat cannot be filed on behalf of an undisclosed principal. (7) If it is not clear from the caveat who is claiming the interest, the caveat should be rejected for clarification. Although the addition (occupation) of the caveator is required by statute, it's omission is not a reason for rejection. Who may lodge a caveat? There are a number of persons who may lodge a caveat, including a person claiming an interest in a lot to be transferred or a person who has the benefit of an order of an Australian court restraining the registered proprietor from dealing with the property/Lot. 3. What is an interest? An interest means: 

A legal or equitable estate in land or other property; or

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A right, power or privilege over, or in relation to land or other property. 4.When would you want to lodge a caveat? Examples of when a person may want to lodge a caveat are as follows : 

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When a purchaser enters into an agreement to purchase land from the owner of the land and settlement is delayed or when a substantial deposit has been paid. Where a person has lent money to another person and as security for that loan the borrower has signed an agreement to mortgage. A tenant under an unregistered lease may wish to lodge a caveat to give notice of its interest in the land. It is important to note that the lease may contain a clause which provides that the tenant will not

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register a caveat. The sixth edition 2012 (4) of the Auckland District Law Society deed of lease contains such a clause. When a person has entered into an agreement to create an easement over another person’s land and the easement has not yet been registered on the title to the land.

The main point is that the interest has to be an interest in the land and not just some right against an owner of land. For example, an unsecured creditor has only personal rights against the debtor and therefore has no automatic right to lodge a caveat against the title to the debtor’s land. 4. What are the grounds to claim an interest in a property? In order to establish that you have a caveatable interest over the property, a caveator needs to show that they have sufficient interest over the property. This may be in the form of an equitable mortgage (for example, when a parties’ relationship breaks down) or that they are the buyer of the property where settlement is not to be effected for some time or where proceedings are on foot and the registered owner is attempting to sell the property. These are just some examples.

5. Liability for Lodgment of a Caveat A person who lodges or continues a caveat without reasonable cause must compensate anyone who suffers loss or damage as a result. It is therefore essential that a caveat be lodged if there is a cavetable interest and the caveat is lodged with reasonable cause.

6. Who receives notice of the caveat? The Registrar must give written notice of the caveat to all persons whose interest, or whose right to registration of a dealing on title, is affected by the caveat. This includes (for example), the registered owner of the property and any mortgagee which has a mortgage over the property.

4. Acceptable Interests for Caveats The following list represents common types of acceptable interests: Note: Items a) through f) must specify an amount (amounts and clarifications can be taken from attachment). a) equitable mortgagee or encumbrancee pursuant to an unregistered mortgage, debenture, encumbrance or floating charge (9) b) equitable mortgagee pursuant to a hypothecation agreement c) charge for real estate commission pursuant to a listing agreement which expressly charges the land (10) d) charge against the land pursuant to an agreement or statutory provision (e.g., unpaid condominium fees) e) equitable mortgagee pursuant to a mortgage of a mortgage f) security under the Bank Act g) charge by virtue of an unpaid vendor's lien or purchaser's lien (11) h) encumbrancee pursuant to an annuity or rent charge i) purchaser or beneficial owner pursuant to an agreement for sale or to an assignment of an agreement for sale j) beneficial owner pursuant to a will, settlement or trust deed (When pursuant to a will, the caveat claim must state that the testator is deceased) k) executor or administrator of a deceased person having an interest in the land l) trustee in bankruptcy pursuant to a bankruptcy receiving order or assignment in bankruptcy m) beneficial owner pursuant to a severance of a joint tenancy n) beneficial owner by virtue of adverse possession o) claim to beneficial ownership or a lien pursuant to section 69 of the Law of Property Act p) right to purchase the property pursuant to an option to purchase or a right of first refusal to acquire an interest in land (12) q) leasehold interest pursuant to a lease or to an assignment or transfer of lease r) dower interest in homestead property s) rights granted under an easement, utility right of way, party wall agreement, restrictive covenant or encroachment agreement t) assignee or transferee of a registered or unregistered interest

u) rights granted under an amending agreement in respect of a registered or caveatable interest v) priority over rights granted in another instrument or caveat pursuant to a postponement agreement w) assignment of rents payable pursuant to a lease of land (13) x) profit à prendre (e.g., the right to take soil, gravel, timber, etc. from the land) (14) y) non-disturbance rights granted by a mortgagee to a lessee z) public utility charge which specifically charges the land (15) aa) an interest re: a notice of intention to sell pursuant to section 70 of the Civil Enforcement Act (Registration number of Writ of Enforcement should be shown in the claim) (16) ab) an agreement to execute documents that affect land (e.g. lease or mortgage) ac) a caveat filed by The Public Trustee for the Province of Alberta (use document type Caveat re Public Trustee (CAVP) for registration) ad) rights granted under a conservation easement ae) Surface Rights Board OrdeR

5. Unacceptable Interests for Caveats The following list represents some interests claimed which are not caveatable: (17) a) promissory note (unless land is specifically charged) b) personal loan (unless land is specifically charged) c) builders' lien (to be registered by way of builders' lien as there is no lien unless the requirements of the Builders' Lien Act are complied with) d) creditor pursuant to a writ of enforcement (18) e) any interest in untitled land (19) f) any interest in minerals registered in the name of the Crown in the right of Alberta (20) g) solicitor's lien (unless land is specifically charged by agreement) h) security interest in chattels (21)

i) mortgage administration agreement j) brokerage or appraisal agreement (unless agreement specifically charges land) k) guarantee of mortgage (unless guarantor has paid the mortgage debt) (22) l) assignment of proceeds of future sale or proceeds of a mortgage (unless land is specifically charged by the agreement) (23) m) beneficial interest by virtue of being a limited partner (24) n) interest in part of a parcel (unless it has subdivision approval or is exempt from subdivision approval) o) participation agreement (unless an interest in land is granted under the agreement) p) claim under the Matrimonial Property Act (to be registered by way of certificate of lis pendens) (25) q) development agreement (unless pursuant to a specific section of Part 17 of the Municipal Government Act or it creates an interest in land such as a charge) Lapsing of a caveat The registered owner may serve a notice requiring the caveator to initiate court proceedings to establish the interest claimed in the land within 14 days of receipt of the notice. The registered owner must also notify the Registrar of Titles that such a notice has been issued. If the caveator receives such a notice, the caveator must do two things to stop the caveat lapsing: 

Initiate proceedings in a court of competent jurisdiction to establish the interest claimed under the caveat within 14 days of notice being served; and

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Notify the Registrar within 14 days that proceedings have been started and identify the proceedings. If the caveator does not comply with both requirements above, the caveat lapses.

If the registered owner does not serve a notice under section 126(3) of the Land Title Act, as described above, on the caveator, the caveator must still take action to stop the caveat lapsing by: 

Initiate proceedings in a court of competent jurisdiction to establish the interest claimed under the caveat within 3 months of the lodgment of the caveat; and

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Notify the Registrar within 13 months that proceedings have been started. If the caveator does not comply with both requirements, the caveat lapses.Procedures for removal A caveat remains in place until withdrawn by the caveator (who is the person who lodged the caveat against the title to the land), or lapsed, or removed by order of the High Court. 

Withdrawn by caveator  The person who lodged the caveat can register a withdrawal of the caveat and the caveat will then be withdrawn from the title to the land.

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Lapse  The owner of the land or a person having an interest in the land can apply to the Registrar-General of Land (“RGL”) for the caveat to lapse.  The RGL will then give the caveator notice of the application to lapse the caveat. Once the caveator receives notice that an application has been made to the RGL, then the caveator has 14 days to notify the RGL that an application has been made to the High Court to sustain the caveat.  If the caveator does not notify the RGL that an application has been made to the High Court to sustain the caveat, then the caveat will lapse.

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Removal by High Court  The High Court may make an order that a caveat be removed if it is clear that there was no valid ground for lodging a caveat, or

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that the interest which in the first place justified the lodging of the caveat no longer exists. The onus is on the caveator to show that there is a reasonably arguable case for the interest to continue to be protected by the caveat remaining.