You will recall in our last principals newsletter we mentioned that our Platinum Partners have access to Barclay MIS for the recovery of office debt free of charge.
We have recently had 2 of our clients approach us with issues regarding caveats, one client sadly came to us too late and has suffered a loss in excess of $25,000.00 consisting of the lost commission and legals, the other client who is one of our Platinum Partners contacted us from the previous Principals Newsletter article just prior to lodging a caveat over a property in an attempt to secure a substantial debt for commission owed on a previous sale.
In light of these recent situations we thought it timely to look to clarify the situation regarding caveats and their use.
The vendor in question, in the second instance, was in financial distress and had to liquidate a number of properties. Our client had sold one of these properties and an agent in a different location had a contract of sale on another.
Our client was about to lodge a caveat to force the vendors to pay his commission either before or at settlement. Had our client not spoken to us before lodging the caveat he could have been held liable for substantial damages arising out of jeopardising the settlement of the sale and any associated legal costs arising from the lodgement of the caveat from both purchaser and vendor.
With regard to caveats it is important to understand that you can only place a caveat over a property if you have what is called “ a caveatable interest ” in the property. A couple of examples of a caveatable interest are -
- Equitable mortgagee or chargee
- Purchaser under a contact of purchase
A court judgment against a person does not necessarily create a caveatable interest in real property entitling you to lodge a caveat over the property and certainly, just a debt from money owing falls even further short of a caveatable interest.
The lodging of a caveat without having reasonable cause or a caveatable interest can make you libel for damages to the registered owner of the property. Below are a couple of examples -
- Additional interest payments on a mortgage
- Lost profits from a business to be run on the acquired land
- Damages paid to a purchaser if a sale falls through
- Delay of sale resulting in increased capital gains tax
on and on it goes.
Our clients situation in the lodging of a caveat over the property could have prevented the registered owner of the property from settling the sale by the due date, this could have left our client libel to pay substantial compensation to the registered owner of the property and the purchaser of the property so not only would our client not have received his commission but would have had major litigation commenced against him for losses and costs from the vendor and purchaser.
The potential consequences that would have flowed on had our client lodged the caveat just kept getting worse in that shortly after the vendor, who was a registered company, was placed into liquidation by their bankers. If the caveat had been lodged our client could have been sued by the liquidator also for the company's losses and liquidator's costs.
The information contained above is not meant to be legal advice it is for general information purposes only.
Should you have any questions please feel free to contact me on the below contact details.
David Banks CEO
Mobile 0419 700 613
Landline 1300 883 916