Caveats- What they are and how you deal with them
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Caveats over land- what are they?
Caveats are interesting creatures of statute, brought to life by the victuals of the National Land Code 1965 (“NLC 1965”). They a very important legal device and it is important to know when and where they may be utilised.
Consider a simple example.
Peter intends to purchase house No. 10, Jalan Downing from Jane, who is (Jane) the registered owner.
Jane agrees to sell. As they are good friends, Peter immediately transfers the sale amount (of RM300,000.00) into Jane’s bank account (before any paperwork has concluded).
On a whim with nary a thought for reason and accountability, Jane refuses to sell No. 10 to Peter and insists that the RM300,000.00 was a gratuitous payment.
Peter intends to sue Jane for specific performance (i.e., compel Jane to complete the sale of No. 10).
Before Peter can initiate the suit, he discovers that Jane has entered into negotiations with Pat, who is a mutual friend of theirs.
Peter is now worried that Jane may sell No. 10 to Pat. If the sale to Pat goes through, the proposed action against Jane will be rendered pointless.
In such a situation, Peter would be able to protect his interests by placing a caveat on No. 10’s Land Title. The caveat will have the effect of disabling any transactions with regard to No. 10 until it (caveat) is lifted. This will allow Peter the opportunity to conclude his action against Jane.
What is a caveat?
A caveat over land is essentially a means of preserving the status quo between the parties pending the conclusion of litigation over a disputed piece of land (per Lord Diplock in Registrar of Titles, Johore v Temenggong Securities Ltd  2 MLJ 44).
Section 5 of the National Land Code 1965 (“NLC 1965”) defines a caveat as being “a registered caveat”. Not much to be gained by way of the interpretation, one dares venture.
How are caveats entered?
The procedure for entering a registered caveat is to be found at Section 323 NLC.Section 323(1) NLC specifies that the only persons entitled to enter a private caveat are:-
Any person claiming title to, or a registrable interest, in any alienated land OR undivided share in any alienated land or any right to such title or interest;
Any person claiming to be beneficially entitled under any trust affecting any land;
The guardian or next friend of a minor claiming to be beneficially entitled under a trust affecting land.
Any person intending to enter a caveat over any title will utilise Form 19B. Form 19B must be accompanied by the prescribed fee, a statutory declaration by the applicant (outlining the reasons why the caveat ought to be placed over the title) and the details of the land.
It must be noted that Land Offices (dependent upon their location) tend to have different modus operandi with regard to the placement of caveats. Applicants must take note of this and adapt accordingly.
The Land Registrar is NOT required to inquire into the validity of any application made for the lodgment of a caveat; the Office plays a purely procedural role.
How are caveats removed?
Having life breathed into them by statute, it is poetic that the hand that feedeth doth also take away.
Caveats may be removed in THREE (3) ways:-
Section 325 NLC- The person who enters the caveat willingly withdraws the same via Form 19G (the “easy way”);
Section 326 NLC- The caveat is removed by the Registrar via Form 19H (the “medium way”); OR
Section 327 NLC- The caveat is removed by an Order of Court (the “hard way”).
The “easy way” - Section 325 NLC
This method of removing a caveat is self-explanatory; the person who entered it merely removes it by filing Form 19G with the Land Office concerned.
It saves all parties concerned time, trouble and expense.
A word of caution; ensure that all documents are accurate. Any little slip (be it even a comma out of place) will cause Form 19G to be rejected by the Land Office. Measure twice, cut once ought to be one’s mantra here.
The “medium way” – Section 326 NLC
This method will see the landowner (the Caveatee) putting in an application to the Land Office via Form 19H, requesting that the Land Registrar cancel all caveats placed upon his land.
As with all things in life, there are complications. Upon putting in the application, the Registrar will be obligated to serve a notice on the person who has placed the caveat (the Caveator), informing him of the intended cancellation.
Upon receiving the Notice of Cancellation, IF the Caveator does nothing within 2 months, the caveat automatically lapses. If this happens, the Caveatee will be able to go on his merry way without fear of the caveat preventing any dealings over his property.
The Caveator may, however, make an ex parte application to Court to extend the lifeline of the caveat. This would be detrimental to the Caveatee as he would then need to undertake the “hard way” to remove the caveats; a battle royal in Court.
The “hard way”- litigation pursuant to Section 327 NLC
When push comes to shove, there really is only one way to remove a caveat; an old-fashioned showdown in Court.
The procedure for the removal of caveats will see the Plaintiff filing an Originating Summons (accompanied by an Affidavit in Support) into Court.
After an exchange (or flurry) of affidavits, both parties will be heard by the Judge. Once closing submissions have been made, a decision will be pronounced.
As always, consult your solicitor before putting in any application for the removal of a caveat(s). Land matters have a tendency to be emotionally-charged and it would be best to engage a disinterested party to pursue your legal rights.
Caveats are a very necessary aspect of the Torrens system of Land Titles. They maintain the status quo between parties pending the disposal of a dispute.
However, the easy manner in which they may be entered may render the process open to abuse. I personally have dealt with situations where caveats were entered over land without any justification whatsoever.
If one owns multiple parcels of land and/or property, it is always advisable to do periodical 5-year checks to ensure that no caveats have been placed over said assets.
It leaves a bitter taste in the mouth for a dreamlike Sale and Purchase Agreement to be rudely juddered into reality by the discovery of a hitherto unknown caveat.
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