The short answer is No, unless the debtor has expressly (and preferably in writing) given you authorisation or permission to lodge a caveat against his property as a security for the debt or as a comfort for the repayment of the debt. It is the giving of the security that creates an interest or estate in the property in your favour.
If you are given such security or comfort, you can rely on section 89(1) of the Transfer of Land Act and lodge a caveat. Section 89(1) states that ‘Any person claiming any estate or interest in land under any unregistered dealing or by devolution in law or otherwise or his agent may lodge with the Registrar a caveat in the appropriate approved form …’ The critical element is the claiming of an estate or interest in land which supports the caveat (the caveatable interest).
Before you lodge a caveat, you must be able to claim an estate or interest in the land of the debtor. The fact that you have lent money to the debtor who has promised to pay it back does not by itself create an interest in land. All you have is a contractual right to be repaid the money lent by the debtor. For there to be a caveatable interest, your contractual right to be repaid the debt must be coupled with the granting of an interest in the land of the debtor.
If a you have a caveatable interest to support your caveat, the caveat will serve as a notice to the public at large that you have an interest in the land and that any dealing with the land (for example a change in proprietorship) is prohibited as long as the caveat remains in force.
Some of the more common types of caveatable interests are:
- Unregistered mortgages;
- A claim by the purchaser of the land under an uncompleted contract of sale;
- An agreement allowing a party to lodge a caveat against the property in exchange of financial accommodation;
- A claim under a charge;
- A lease; and
- Generally, that the land is held on trust.
The procedure for lodging a caveat is relatively simple in that it is only a ‘caveatable interest’ that needs to be claimed. When lodging the caveat there is no need to provide evidence or substantiate the interest claimed. You just have to show that you have a caveatable interest and the Registrar of Titles will register the caveat.
However, if there is an application to remove the caveat, then you must establish by evidence that there is a caveatable interest. Section 118 of the Transfer of Land Act provides that if a caveat is lodged without reasonable cause and the proprietor of land suffers losses as a result of the caveat, the court has power to order compensation.
For example; you lodge a caveat without having authorisation to do so and you refuse to withdraw the caveat when asked to do so. In the meantime, a sale of the land falls over because of the caveat. The proprietor of the land may claim compensation under section 118.